Press Release

Ripple CEO To Face Trial According To A California Judge

A California judge sends the Ripple Securities lawsuit to trial and dismisses four class action claims.

TakeAway Points:

  • Brad Garlinghouse, the CEO of Ripple, will go on trial in California for allegedly making false representations in 2017, but the judge has rejected additional class action lawsuits.
  • In contrast to a New York decision that supported Ripple, the court dismissed Ripple’s claim that XRP is not a security under the Howey Test.
  • This ruling affects investor expectations and market dynamics by further complicating the regulatory environment for cryptocurrencies.

Ripple Lawsuit faces Trial

A significant development in the ongoing legal battle involving Ripple has emerged. A California judge has ruled that a civil securities lawsuit against Ripple will proceed to trial, partially denying the crypto firm’s motion for summary judgment. 

The lawsuit alleges that Ripple’s CEO, Brad Garlinghouse, violated state securities laws in 2017. Specifically, a jury will now hear arguments on whether Garlinghouse made “misleading statements” during a 2017 televised interview in connection with the sale of securities. However, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California dismissed the other four claims in the class action lawsuit, which were related to “failure to register claims.”

Ripple’s Chief Legal Officer, Stu Alderoty, expressed satisfaction with the court’s decision to dismiss the class action claims, stating, “We are pleased that the California court dismissed all class action claims. The one individual state law claim that survived will be dealt with at trial.”

SEC Closes Consensys Probe

In a positive turn for Ethereum, the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Consensys, the technology incubator company behind the MetaMask wallet. The SEC has decided not to recommend any enforcement action against Consensys. 

This decision was communicated through letters sent to Consensys’ law firms, which stated, “Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against your client, Consensys Software Inc.”

The SEC’s decision to close the investigation into Ethereum 2.0 has had a positive impact on the price of ether (ETH), which rose as much as 2.6% following the announcement. 

Over the last 24 hours, ETH has seen a 3% increase, according to data from CoinGecko. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), has also added 1.2%.

Growth in Market for Crypto secondaries

The crypto secondaries market is experiencing a resurgence, driven by increased investor interest and expectations of upcoming initial public offerings (IPOs). Equity in private digital-asset companies such as Circle Internet Financial, Kraken, and Chainalysis has been trading more actively, with prices on secondaries rising significantly. 

According to Forge Global, a secondary market platform, crypto buy-side demand in the first half of 2024 is 28% higher than in the second half of 2023 and 126% higher than in the first half of 2023.

Implied prices for equity in Kraken have surged 77% year-to-date, while Ripple has seen a 13% appreciation, and Chainalysis has experienced a 17% increase. 

“There’s pretty strong individual investor demand. On the institutional side, we’ve definitely seen an increase. I would say the market is the most robust that we’ve seen in a while.” Andrew Saeta, co-head of institutional sales at Forge, noted.

The renewed interest in crypto has been fueled by a first-half rally in Bitcoin, which hit new highs in March, and a perceived regulatory shift on Ethereum. Additionally, crypto policy has become a topic of debate in the upcoming U.S. presidential campaign, potentially signaling a more favorable regulatory environment for the industry.

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