Ripple Scored a Legal Victory, but the XRP Security Debate Rages On

Judge's decision in the Court for the Northern District of California narrowed the case to a minor state law claim related to allegedly misleading statements.

A recent class action lawsuit against Ripple over XRP has taken a new turn, with most claims being dismissed. The case now hinges on a minor state law claim regarding allegedly misleading statements.

The crux of the matter is whether XRP can be classified as a security. The Californian ruling marks a victory for Ripple, but it suggests that XRP could be deemed a security under specific conditions. This differs from Judge Torres' earlier ruling in New York, which stated that XRP is not a security when sold to institutional investors.

However, California has adopted the Howey test as part of its analysis for determining whether a transaction is a security under state law (Corp. Code section 25019).

Legal experts Fred Rispoli and Marc Fagel have shared their insights on the implications of these developments. Rispoli, a strong advocate for XRP, highlights the potential impact of California law on the definition of securities in light of the court's interpretation.

On the other hand, Fagel, drawing from his SEC experience, points out the complexities of federal and state considerations in determining whether XRP transactions fall under securities regulation.

"The court's decision leaves open the possibility that XRP could be classified as a security under California law, if not federal law," Rispoli noted in response to the ruling.

Fagel, however, expressed a differing view, emphasizing that while California's adoption of federal standards like the Howey test affects local interpretations, the broader implications for federal courts seeking guidance are limited.

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