Disgruntled Investor Appeals to U.S. SEC Guidelines in Class Action Suit Against Ripple

Published on by Cointele | Published on

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.

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.

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.

"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."

"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, and subsequent case law. XRP tokens also qualify as a security under California law."

"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."

As previously reported by Cointelegraph, the SEC recently moved to postpone its decisions on three Bitcoin exchange-traded fund 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.