Ripple Hit Hard as Judge Decides Its Class-Action Lawsuit Can Proceed

A federal judge from California has ruled against the request from Ripple to stop a class-action lawsuit that claims the company sold XRP to its customers as an unregistered security. This means the case will go ahead as planned initially, a big blow to the XRP and Ripple community at large.

Ripple had requested to stop the lawsuit back in December 2019, where Judge Phyllis J. Hamilton disagreed with them back on January 16. In her words, “based on the plaintiff’s complaint and judiciary noticeable facts proffered, the court cannot conclude that the defendants’ first bona fide public offer to sell XRP occurred before August 5, 2016”.

The lead plaintiff in the class-action lawsuit Bradley Sostack was quoted saying that the delay of the case does not give any guarantee to Ripple after violating security laws. According to him, XRP is a security, and therefore, Ripple selling it as a token to the general public without registering it with the SEC is illegal.

This followed a group of investors who lost a big sum of their investment due to the depreciation of XRP token joining the class-action lawsuit way back in 2018. Since then, Ripple has been fighting the lawsuit trying to prove their point without prevailing.

According to Ripple, purchasing XRP is not an entry ticket for acquiring shares in the company, furthermore, it is planning going public through an IPO to sell its shares to the public officially. The company has over the years dismissed claims from investors that there was a promise from the company to help the XRP holders generate profits, and besides, XRP ledger is a different entity and also a decentralized one for that matter.

What the Class-Action Lawsuit Means for Ripple and XRP future

For a long time, the crypto community has not been in a position to differentiate Ripple as a company and XRP as a token. Ripple uses its RippleNet system to offer services to financial institutions in the fast and cheap transfer of money. The project is dammed xCurrent which in its entirety does not make use of XRP.

On the other hand, ODL is the project being implemented by money transfer companies like MoneyGram and Western Union to make use of XRP. This makes the two projects by Ripple different entities that are independent at the same time.

The lawsuit that has Ripple fighting to prove it did not violate any security exchange rules might affect Ripple as a company more than it affects XRP as a crypto asset. At the end of the day, the 10 billion XRP market cannot be closed to satisfy the need for a few, Ripple will have to take the cost if it loses the case.

However, since XRP is the main source of liquidity for Ripple, it might just go into its XRP research to pay for the cost incurred. This will, in turn, cause inflation in the XRP thus decreasing its market value.

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