Coinspeaker
XRP Price May Stay Under Correction as Ripple Fails to Stop Its Class-Action Lawsuit

A technical correction during the recent period plunged the XRP price down by approximately 36 percent. Unfortunately, the correction doesn’t seem to be stopping. At the time of writing, XRP was down 1.77% to $0.24. And what is even worse, those are nor our neither analysts’ predictions. These words came from Ripple Labs, a San Francisco-based blockchain payment firm, that has about 60 percent of total XRP supply in its portfolio. The company proclaimed this, to put it gently, a bearish scenario about the cryptocurrency as it failed to get a judge into dismissing a class-action lawsuit against them.

We already wrote of how 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 judge in the XRP securities class action has granted in part & denied in part Ripple's motion to dismiss the case.

There's a lot going on here, but overall it's a victory for the plaintiffs. The securities claims survive. XRP stays in the crosshairs.https://t.co/81qSNDznaA

— Jake Chervinsky (@jchervinsky) February 26, 2020

The company also argued that continuing the lawsuit could potentially harm XRP, whose market put down $500 billion worth of trades since 2017.

Judge Phyllis’s rulings over the lawsuit of Ripple came amid worries that the U.S. Securities and Exchange Commission (SEC) could classify XRP as security and stop its trading across all the major U.S. exchanges. The regulator has not taken any attitude towards it.

On the other hand, investors posing as plaintiffs said that they suffered losses because Ripple was fake promoting itself and offered fake possibilities if invested. The company denied all the accusations ever since the case went to floors two years ago.

Therefore, the latest ruling by the court gave the both sides chance to discuss the nature of XRP on a public forum. The relevant question was and still is: is it a truth or not that Ripple offered XRP to non-accredited investors with a clear mission to raise capital in order to build its blockchain company? The thing is, just the threat of an unfavorable ruling increased XRP as a pretty risky asset to hold.

However, Twitter community has its Ripple proponents as well. According to pseudonymous Twitterati GreenEggsnHam, Ripple’s standing in the group of the state regulators and traditional financial organization and that precedes everything else. The market analyst alleges that the company actively works with the Federal Reserve, DTCC, BIS, IMF, BOE, and others.

FinTech lawyer Arturo Portilla thinks that it’s not the court’s problem what the SEC thinks. The court only job is protecting investors.

He wrote:

Neither the Fed nor the Treasury have the legal authority to either construe or apply securities regulation. I don't know why Ripple's involvement with such entities is even relevant for the matter at hand.

Again, the courts are the ones with the final word (e.g. howey test).

— Arturo Portilla (@Arturo_P_A) February 27, 2020

We still have to see what will happen to XRP.  According to the company, purchasing XRP is not an entry ticket for acquiring shares in Ripple itself.

Also, Ripple may go public through an IPO to sell its shares to the public officially. Earlier it was said that it may happen already in 2020. However, later Ripple CEO Brad Garlinghouse stated that it will probably not happen so soon.

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.

XRP Price May Stay Under Correction as Ripple Fails to Stop Its Class-Action Lawsuit

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