Crypto Sector: Ripple Faces Class Action Over Alleged Illegal XRP Sales

The crypto firm Ripple has not yet ended its legal battle with the SEC when another lawsuit could involve it. Ripple is accused by individuals and companies of having “illegally” sold them XRP. Here is concretely what is at stake in the context of what appears to be a class action lawsuit.

What the crypto firm Ripple is accused of

Ripple, the crypto company behind XRP, faces a significant legal challenge. It’s a class action lawsuit introduced in California. A legal action that accuses the company of having violated the securities laws through unregistered sales of its native crypto.

This legal procedure is carried out on behalf of two distinct groups. Specifically, the Federal Securities Claims and the California State Securities Claims Class. Together, they comprise individuals and legal entities that purchased XRP between July 3, 2017, and June 30, 2023.

Furthermore, the legal action targets not only Ripple. It also targets Bradley Garlinghouse, its CEO, and XRP II, LLC, its subsidiary. All are accused of having sold XRP without the necessary registration, thus contravening federal and Californian securities regulations.

For now, there is no certainty that this complaint, although filed, will evolve into a trial. However, what is known is that investors and concerned parties have until April 5 to decide to withdraw from the class action. They would thus retain the possibility of pursuing an independent lawsuit against Ripple.

XRP Vs. SEC: Ripple Faces New Class Action for Unregistered XRP Offeringshttps://t.co/d0jgvyO8lI

— John Morgan (@johnmorganFL) February 26, 2024

A Challenging Legal Environment for Ripple Already?

This new lawsuit against Ripple does not come out of nowhere. Indeed, it is linked with the ongoing legal battle of the company against the Securities and Exchange Commission (SEC).

The two actions seem to be related by the reason for which they were initiated. Namely, that Ripple conducted an unregistered securities offering via the sale of XRP crypto. Of course, the firm does not see it that way.

Ripple’s defense has always been based around a fundamental distinction. The one stating that XRP should not be classified as a security, but rather as a digital currency used for international transactions.

This nuance is crucial, particularly for regulatory implications. It’s important to know that for Ripple, classifying XRP as a security would result in subjecting the crypto to strict regulatory requirements. This is the very essence of the legal war it has been waging against the SEC since 2020.