- Ripple Labs’ class-action lawsuit may have had unexpected implications for the company.
- The possibility of an SEC victory could lead to a fund to compensate XRP holders.
- International XRP holders are unaffected by the certified class-action lawsuit.
The ongoing class-action lawsuit against Ripple Labs, its CEO Brad Garlinghouse, and subsidiary XRP II may not be as worrisome for the company as initially believed, according to XRP-friendly attorney John E. Deaton.
Class-action Plaintiffs Eyeing Ripple’s Victory in SEC Case?
In a recent tweet, Deaton expressed the notion that the plaintiffs’ legal representatives might desire a favorable outcome for Ripple in the ongoing Securities and Exchange Commission (SEC) case.
This counterintuitive stance arises from the possibility that a comprehensive SEC victory could establish a fund to compensate XRP holders, which in turn would undermine the class-action lawsuit.
Deaton clarified that if the SEC were to prevail completely, it would be the agency itself collecting the funds rather than the plaintiffs in the class-action suit. The central focus of both the SEC and class-action cases revolves around whether XRP, the cryptocurrency affiliated with Ripple, should be classified as a security.
No Impact on International XRP Holders
This pivotal question has been at the forefront of Ripple’s legal battles in recent years. To address the concerns of international XRP holders, Deaton elucidated that the certified classes involved in the class-action lawsuit solely pertain to investors in the United States.
He cited the stance of regulatory bodies such as the Financial Conduct Authority (FCA) in the United Kingdom and equivalent organizations in Japan, Singapore, and the United Arab Emirates, all of which have deemed XRP not to be a security.
Consequently, the certification does not impact XRP holders residing in these jurisdictions. Ripple Labs faces the dual challenges of the SEC lawsuit and the certified class action, with Deaton’s remarks indicating that the former may carry more significant repercussions for the company.
Sponsored
A favorable outcome for Ripple in the SEC case has the potential to reshape the class-action lawsuit landscape and exert broad-ranging effects on the classification and regulatory framework governing cryptocurrencies.
On the Flipside
- The determination of whether XRP is a security is a complex issue that extends beyond the scope of the ongoing legal battles.
- While regulatory bodies in the UK, Japan, Singapore, and the UAE have declared XRP not to be a security, the SEC’s position remains that it is.
- The outcome of this specific case may not set a definitive precedent for other cryptocurrencies, as each case is evaluated on its own merits and unique circumstances.
Why This Matters
A Ripple victory in the ongoing SEC case could have far-reaching implications for both the class-action lawsuit and the broader crypto industry. It could undermine the class action by establishing a fund to compensate XRP holders and reshape the categorization and regulation of cryptocurrencies, impacting the overall crypto market.
To learn more about the recent massive XRPL account deletion and the destruction of 247,016 tokens, read here:
Massive XRPL Account Deletion Leads to Destruction of 247,016 Tokens
To stay updated on the proposal by Hong Kong academics for a government-endorsed stablecoin, read here:
Hong Kong Academics Push for Government-Endorsed Stablecoin Proposal
