Ripple Faces Major Legal Defeat That Spells Trouble for XRP

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Thu, 02/27/2020 - 06:03
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Alex Dovbnya
The lawsuit that accuses Ripple of selling XRP as an unregistered security gets the go-ahead
Ripple Faces Major Legal Defeat That Spells Trouble for XRP
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A federal judge in the state of California has dismissed Ripple's motion to put an end to the damning XRP securities lawsuit, thus delivering a major blow to the $10 bln blockchain giant. 

Related Ripple CTO on XRP Securities Lawsuit: "Our Attorneys Have the Best Words"
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Ripple CTO on XRP Securities Lawsuit: "Our Attorneys Have the Best Words"

A failed bid to stop the lawsuit 

Ripple made a last-ditch effort to stop the lawsuit from moving forward in December 2019. As reported by U.Today, Judge Phyllis J. Hamilton took its motion under submission on Jan. 16. 

After taking Ripple's statute of repose arguments into consideration, the judge ruled that it wasn't persuasive enough to toss out the lawsuit.    

"Based on plaintiff’s complaint and the judicially noticeable facts proffered, the court cannot conclude that defendants’ first bona fide public offer to sell XRP occurred before August 5, 2016,” 

On the bright side, Hamilton did dismiss some state-level claims. However, another complaint can be filed by defendants in a span of 28 days to further pursue them.       

Related Ripple Is Still Liable for Illegal XRP Sales, According to Lead Plaintiff in Class-Action Lawsuit
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Ripple Is Still Liable for Illegal XRP Sales, According to Lead Plaintiff in Class-Action Lawsuit

Broad implications 

Ripple was hit with its first class-action lawsuit by investors who claimed that the company misled them into buying XRP as an unregistered security. If the third biggest cryptocurrency is indeed recognized as one, its value could ultimately collapse. 

Meanwhile, US regulators have so far failed to bring more clarity to the table when it comes to XRP's security status. Earlier this year, CFTC chairman Heath Tarbert alleged the token could be treated as a commodity or a security. 

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.