Zakinov v Ripple: Plaintiff Representative Says XRP Holders Fake

Key takeaways from the certification hearing as reported by a crypto media agency:

• Judge Phillis J Hamilton heard the case in the state of California. No judgment was made in the hearing. An outcome is awaited.
• John Deaton was frustrated that amicus attorneys were not allowed to attend the oral hearing. The judge is reviewing the facts presented by both parties.
• Judge Hamilton questioned the precedent for a ‘worldwide class’ amid Nick Spear’s (representing plaintiff) claim that over 75,000 XRP holders didn’t exist.
• Spears also explained methods to calculate damages.
• Andre Michaelson, representing Ripple, highlighted the irrelevance of an investment ‘contract’ as plaintiffs made secondary market purchases.
• Michaelson said that the plaintiff’s day trading activity to counter the expecting-profits-from-others-efforts clause of the definition of a security.
• The plaintiff will submit expert disclosures on May 8th.

The Other Ripple Lawsuit…

The hearing of a class action case filed in 2018 against Ripple was held in California at 1 pm PT (4:30 pm ET), April 26th. In 2018, Ripple was sued for selling XRP as unregistered securities. The infamous SEC v Ripple case was filed two years later. CryptoLaw tweeted about the hearing on April 26th.

When a court certifies a class in a class certification hearing, the plaintiff may legally represent a class of plaintiffs. In this case, Bradley Sostack wants to be that representative.

Bradley Sostack sold XRP at a loss after holding it for two weeks. Sostack wants to represent all those who owned XRP and who sold it at a loss. Sostack wants certification for all XRP holders. The plaintiffs will argue for the creation of that class.

The fact is that such a class would include the 75,000-plus XRP holders, the majority of whom support Ripple in the ongoing SEC vs Ripple case. The ‘class’ would by definition, include all those who hold XRP, including those who own it through direct purchase or secondary sales and even those in counties where XRP is classified as a non-security. 

John Deaton’s Amicus Brief

John Deaton, the founder of CryptoLaw, filed an amicus brief in February, making a case against the certification of the said ‘class’ because of the conflicts that arise by the classification of XRP as a security. 

Deaton urged the public to not interfere during the hearing, which will be open to 500 members of the public. Amicus attorneys can not be present at the oral hearing.

Notably, the case was filed against Ripple CEO Bradley Garlinghouse and Ripple after Sostack suffered losses. However, after SEC’s guidelines were published in April the following year, the case turned into one of illegal trading.

The pro-crypto community attorney said “I’ve never been so frustrated in my legal career watching this zoom hearing. Mainly because I can’t speak and address the questions and issues being asked by the Judge. The problem is no one understands the tech.”

Trial Postponed to April 2024

‘Mr Huber’, shared an image of the case schedule on Twitter that showed the trial was extended by a month and that it will start on April 15, 2024. By April 15, 2024, the case will be 6 years old! Mr Huber noted that a settlement would be ‘detrimental’ while a judgment could prove to be exponentially beneficial.

Why This Case is Significant

A fundamental debate around which the SEC v Ripple case is built is whether XRP is a security or not. The SEC claims that cryptocurrencies are security while Ripple claims the opposite. Essentially, a judgment might be the only way the case may come to an end.

Recently, Chairman Gary Gensler could not answer simple questions regarding the status of cryptocurrencies. In the hearing of the House Financial Services Committee, chairman Pattrick McHenry and other representatives asked Chair Gensler whether XRP and other cryptocurrencies were ‘securities’ or ‘commodities.’ The chair refused to answer these questions.

Earlier, chair Gensler claimed that the crypto industry lacked regulatory compliance and not regulatory clarity. The committee questioned the chairman’s stance given his refusal to answer basic questions about the legal status of cryptocurrencies.

The Zakinov vs Ripplecase would end sooner if the judge does not certify the class. A judgment could have significant consequences for the SEC vs Ripple case.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing

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