he class action lawsuit against Ripple dates back to May 2018 when Vladi Zakinov filed a complaint alleging that Ripple unlawfully sold XRP as an unregistered security. Zakinov, who briefly held XRP, sought to represent a class of XRP owners making similar claims. In January 2019, the court granted class certification, allowing the case to proceed as a class action. This paved the way for the allegations of Ripple violating securities laws through its XRP sales to be heard on behalf of the entire class.
Key Players and Allegations
The key defendants named in the lawsuit are Ripple Labs, Inc., subsidiary XRP II, LLC, and Ripple CEO Brad Garlinghouse. The class, represented by lead plaintiff Zakinov, alleges that the defendants offered and sold XRP as an unregistered security without following relevant securities regulations. Specifically, it is claimed that XRP buyers purchased the tokens with a reasonable expectation of profits based on Ripple's efforts, constituting it as an investment contract and thus a security under the law. Ripple has denied these claims, maintaining that XRP is a currency and was not offered as an investment opportunity.
Procedural Updates and the Road Ahead
In January 2022, a key procedural hearing addressed notifying potential class members about the ongoing case. This established options for individuals impacted to get informed and potentially register to take part. Most recently, law firm Susman Godfrey released documents and launched a website to facilitate broadening class participation. However, the next pivotal phase of the lawsuit will be the trial currently scheduled for October 2024. At this stage, the court will hear substantive arguments on both sides and ultimately rule on whether securities laws were violated through Ripple's XRP sales. Until then, the case remains pending and investors await the outcome of the high-stakes trial.
What This Means for XRP Investors
For current and prospective XRP investors, this class action poses ongoing risks. While digital assets have boomed in 2022, a ruling against Ripple could deal XRP's status as a currency a major blow. On the other hand, a victory may legitimize XRP and remove regulatory uncertainty around its current and future market participation. The impending 2024 trial date provides clarity on when this long-running saga may conclude. As the case progresses, continued monitoring of developments is prudent for all involved with Ripple and XRP.
