Disgruntled Investor Appeals to US SEC Guidelines in Class Action Suit Against Ripple

August 14, 2019
36 Views

After about a year without traction, a class action suit against Ripple has opted to cite SEC guidelines in arguing that XRP is a security.

XRP investor Bradley Sostack has amended a class action suit against Ripple, in which he alleges that the company misled investors and proceeded to sell XRP as an unregistered security, in violation of federal law.

Sostack submitted his latest filing on Aug. 5 to a United States district court in California. According to a report by CoinDesk on Aug. 13, the original class action suit was filed about a year ago, but had yet to gain traction as a class action suit. However, Ripple now must reportedly respond to this latest action by some time in mid-September. 

Appeal to SEC guidelines

Crucially, the report notes that Sostack’s latest complaint cites guidance issued by the United States Securities and Exchange Commission arguing that XRP counts as a security. Jake Chervinsky, who serves as general counsel to Compound, remarked:

“The Complaint reads like a love letter to the SEC […] Although the SEC’s Framework is technically only non-binding guidance, the Court will likely give it significant weight in deciding how to apply the Howey test to the facts of this case.”

In the filing itself, the plaintiff’s counsel wrote:

“As explained in more detail below, applying the analysis in the SEC Framework and applicable precedent, the XRP tokens offered and sold by Defendants have all the traditional hallmarks of a security, as reflected in SEC v. W.J. Howey Co., 328 U.S. 293 (1946) (‘Howey’), and subsequent case law. XRP tokens also qualify as a security under California law.”

After laying out their substantive allegations and recalling the SEC guidance which references the foregoing Howey case, the counsel concludes the following:

“The SEC Framework makes clear that ‘[w]hether a particular digital asset at the time of its offer or sale satisfies the Howey test depends on the specific facts and circumstances.’ The specific facts and circumstances relating to XRP support the conclusion that XRP is a security under the Howey test.”

SEC postpones ETF rulings

As previously reported by Cointelegraph, the SEC recently moved to postpone its decisions on three Bitcoin (BTC) exchange-traded fund (ETF) proposals. The SEC is currently considering whether to accept proposed rule changes submitted by NYSE Arca and Cboe BZX Exchange on behalf of three Bitcoin ETFs, from asset managers VanEck SolidX, Bitwise Asset Management and Wilshire Phoenix.

The SEC has postponed its decision on VanEck’s listing to Oct. 18, Bitwise’s listing to Oct. 13, and Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust to Sept. 29. Attorney Chervinsky, for his part, forecast a 90% chance of postponement prior to the SEC’s announcements.

You may be interested

Bitcoiners Brace for More Performance Art and Another ‘Satoshi Reveal’
Crypto News
29 views
Crypto News
29 views

Bitcoiners Brace for More Performance Art and Another ‘Satoshi Reveal’

btcethereumadmin - August 17, 2019

On Friday, a variety of paid press releases were published stemming from a company called Satoshi Nakamoto Renaissance Holdings, a…

Passing the Burden of Negative Rates to Bank Clients Opens Door for Cryptocurrencies
Crypto News
29 views
Crypto News
29 views

Passing the Burden of Negative Rates to Bank Clients Opens Door for Cryptocurrencies

btcethereumadmin - August 17, 2019

Record low and negative interest rates have put commercial banks in a difficult spot. Across Europe, they have been passing…

Bitcoin Price Analysis: Higher Lows Test Bullish Resolve
Bitcoin Price
22 views
Bitcoin Price
22 views

Bitcoin Price Analysis: Higher Lows Test Bullish Resolve

btcethereumadmin - August 17, 2019

Summary: After a very strong round of selling that dropped the price almost $2,000 in just a couple of days,…

Leave a Comment

Your email address will not be published.