Ripple Triumphs in Court XRP Deemed Not a Security Claims Dismissed

Ripple Labs Inc. achieved a major victory in the federal class action lawsuit on June 20, as Judge Phyllis J. Hamilton granted summary judgment to dismiss both federal and state class claims that XRP was sold as an unregistered security.
The case (4:18-cv-06753-PJH) overseen by Judge Phyllis J. Hamilton has been closely watched by the XRP community because of its potential impact on the classification of digital assets under US securities law.
Despite the dismissal of the class action claims, the court left the question of whether XRP is a security to be decided by a jury, based on the Howey test’s criteria.
Pro-XRP lawyer Fred Rispoli took to social media to emphasize the significance of this decision:
“Win for Ripple in the Oakland class action. Judge grants Ripple’s summary judgment motion on federal class claims for unregistered securities as well as the state law securities claims. But these were procedural wins.”
Although the class action claims were dismissed, the court did not definitively rule on whether XRP is a security. Instead, it determined that a jury should decide if XRP meets all three criteria of the Howey test, which defines security under US law.
Rispoli also pointed out that this leaves Ripple’s legal battle against the SEC unresolved:
“The class action is now over at the district court level. As to whether XRP is a security, however, the Court held it is for a jury to decide whether all three prongs of the Howey test are met. That claim, an individual claim by one plaintiff, will go to trial though in all likelihood, will settle given the extremely low damages and very bad jury verdict that could result if plaintiff wins. To sum up: Court says whether XRP is a security in the context of retail buyers on an exchange is for the jury to decide and not a matter of law.”
The opinion has sparked diverse reactions from legal experts, with some highlighting the complexities in the legal interpretation of digital assets.
The dismissal of class action claims against Ripple provides a temporary reprieve for the company. However, the broader legal questions about XRP’s status as a potential security remain unresolved. The impending jury decision on whether XRP meets the Howey test’s criteria will be pivotal.
Fred Rispoli stressed the need for federal legislation to clarify the regulatory framework for cryptocurrencies:
“Ultimately, crypto world needs to keep pressure on getting federal legislation, because we are on track to having XRP be a security in California but not in New York.”