The San Francisco-based cross-border payment firm Ripple has been slammed with a fresh class action lawsuit filed in the Northern District of California. The lawsuit alleges that the firm, CEO Brad Garlinghouse, and subsidiary XRP II, LLC, violated federal and California securities laws by selling XRP without proper registration.
The lawsuit contends that Ripple’s sale of XRP, a digital asset it majorly distributes, breached securities laws by not registering it with the Securities and Exchange Commission (SEC). This failure to comply is seen as a violation of both federal and state securities regulations.
Read Also: California Federal Judge Comments On XRP Security Status in Class Action Lawsuit Against Ripple
Federal Securities Claims Class: This group includes individuals and entities who bought XRP between July 3, 2017, and June 30, 2023, and either still hold the asset or sold it at a loss.
California State Securities Claims Class: Individuals in California who meet the same criteria as the federal class and purchased XRP within the specified timeframe fall under this category.
Ripple and its co-defendants have strongly denied any wrongdoing. They argue that XRP does not qualify as a security under current laws and therefore does not need registration. This disagreement sets the stage for a potentially lengthy legal battle with significant implications for both Ripple and the wider cryptocurrency sector.
Investors falling within the defined classes in the lawsuit face crucial decisions. They have until April 5, 2024, to opt out of the class action. Opting out allows them to pursue independent legal action against Ripple, potentially granting greater control over their legal strategy and potential outcomes.
The legal disputes surrounding XRP extend beyond individual companies’ struggles. They play a role in shaping ongoing discussions and regulatory frameworks concerning digital asset classification and regulation. The resolution of this case and similar ones could have far-reaching effects on the entire cryptocurrency industry.
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