People use cryptocurrency in all sorts of ways. Depending on the merchants you patronize, it can be used to pay for everything from food to electronics. We’ve also seen a rise in the avenues for consumers to gamble with these tokens. It was a novel concept a few years ago but now we see casinos popping up to enable gambling with practically every crypto in existence.
As Kane Pepi outlines, Ethereum casinos are increasing in popularity, and for good reason. Deposits and withdrawals can be made in seconds, and payouts are often larger. There’s also the option to gamble anonymously, too. Needless to say, whatever you want to do with crypto, you’ll be able to.
But perhaps the greatest use of cryptocurrency is as an investment vehicle. It is this use of crypto that has proven to be the most controversial as the asset class has been dogged by accusations of being an unregistered security for years. Ripple Labs, one of the biggest projects in the crypto space, has been once again taken to court over this issue.
In a new development, Judge Phyllis Hamilton of the California District Court has approved a lawsuit against Ripple Labs for selling an unregistered security. The alleged security is, of course, its native XRP token and a basis for this lawsuit is an interview by its CEO Brad Garlinghouse.
Back in 2017, Garlinghouse did an interview with BNN Bloomberg where he made statements that could be deemed as misleading. In the interview, he said that he was very ‘long’ on XRP, which implied that he held a significant portion of the token in his personal investment portfolio.
However, the lawsuit alleges that he actually sold much of his stash that year, thus misleading the public. Many would have invested based on the confidence that his HODLing would have inspired and this will now be contested in court.
The other four counts that Ripple will be facing will be based on its native token being a security. This is a battle that Ripple has been facing for years now, including a previous case filed by the Securities and Exchange Commission. Ripple’s native XRP token was not considered a security by a judge in the SEC case based on the Howey test, and now its legal team wants the suit dismissed using the same argument.
However, Judge Hamilton is not in agreement, saying that XRP could be a security as it was sold to retail investors. These same investors were within reason to expect XRP to shoot up in value thanks to its use for cross-border transactions. This is only strengthened by the statements made by its CEO in 2017.
But it isn’t all bad news for the Ripple Labs team as the judge did dismiss a class action lawsuit against the company, leaving it to only worry about the state claim.
Depending on what the jury rules, the previous ruling, which was considered a landmark one in the world of crypto, could essentially be seen as void. This could re-open the conversation about XRP’s status, which had previously been seen as put to rest.
Worse still, other crypto projects could be taken to court based on this ruling and this could lead to a negative ripple effect on the rest of the industry. For now, all we can do is wait and see how this plays out.
