TL;DR: Zakinov v. Ripple Labs Inc., 18-cv-06753, U.S. District Court, Northern District of California will proceed against the company that birthed the world’s third most popular cryptocurrency by market capitalization, XRP. A judge ruled against Ripple Labs’ contention the class-action lawsuit brought against it by investors should be dropped due to its having been filed some five years after the crypto launched.

XRP Market Destroying Class Action Suit Against Ripple Labs Will Move Ahead

Late last year, Ripple Labs insisted Zakinov v. Ripple Labs Inc. failed to reach a reasonable statute of limitations as nearly half a decade had passed between its filing and the cryptocurrency’s creation. Such a class-action lawsuit brought by disgruntled investors so very far after the fact “would upend and threaten to destroy the established XRP market more broadly — a market involving over $500 billion in trading over the last two years,” Ripple Labs warned.

On February 26, 2020 US District Judge Phyllis Hamilton disagreed. Angry investors claimed to have taken heavy losses in response to selling their XRP due to public statements and practices touted by the company, which has pained to distance itself from the currency’s day-to-day operations and Ripple proper. Hamilton did, however, rule against further claims by investors the company made false statements in violation of state law.

Investors essentially charge XRP operates as an unregulated security, inviting scrutiny from regulators and potentially causing major trouble for anyone involved. Bloomberg’s Malathi Nayak explained the judge did agree with Ripple’s defense in part “but left largely intact a complaint by investors accusing the company of selling unregistered securities,” the suit’s heart.

Some analysts believe Ripple and XRP meet the vaunted Howey Test standard for determining what is a security, and that means agencies like the Security and Exchange Commission (SEC) could shut trading down altogether. So far, although the lawsuit has been making its way through the court system for nearly two years, the SEC hasn’t determined XRP’s status.

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