- The court declined to issue a preliminary injunction and lifted the injunction imposed against Ripple Labs.
- In the case John E. Deaton vs. SEC, the agency confirmed that only the court can decide on the classification of XRP as a security.
Ripple Labs scored a victory yesterday in its legal battle with Tetragon Financial Group Ltd. The asset management firm was the largest contributor to a Series C funding round with $175 million and sued Ripple to force stock redemption after the SEC lawsuit was filed. To enforce its right as quickly as possible, Tetragon filed a preliminary injunction on Jan. 7.
As Stuart Alderoty, General Counsel at Ripple Labs, now revealed a few hours ago, the Delaware court has ruled that Tetragon’s claim of a “securities default” is false, as there is no official ruling on the status of XRP. Judge Morgan T. Zurn has thus denied Tetragon’s request for a preliminary injunction, and lifted the previously imposed injunction.
The reasoning states that Tetragon cannot show that the Wells notice or enforcement action is a securities default. Thus, the asset manager had not demonstrated the requisite likelihood of success on the merits of its claim. The Delaware judges stated:
But XRP is no more a security after the SEC filed the enforcement action than it was before it. A determination …resolves the question of whether XRP is a security. The enforcement action, by contrast, asks that question. The question is not yet resolved, so a determination has not yet been made. And when it is made, it will be made by the District Court.
Status of XRP not yet determined: SEC
In addition, Alderoty also referred to a current lawsuit that XRP holders – specifically, attorney John E. Deaton – are seeking against the SEC. The SEC admitted that it has not yet made a decision on the status of XRP. The SEC stated:
The Court hearing the SEC’s case against Ripple is “the exclusive method for testing the validity” of the SEC’s claims against Ripple.
Alderoty commented on the success against Tetragon in combination with Deaton’s filing:
The Tetragon ruling, coupled with the SEC’s filing in @JohnEDeaton1’s case, should put to rest the FUD that the SEC unilaterally determined that XRP is a “security.” Glad that’s settled!
Grad Garlinghouse, CEO of Ripple Labs also commented on both cases via Twitter, denouncing the SEC and the premature delisting of XRP by crypto exchanges:
This is why regulation by enforcement wreaks such havoc. By bringing a massive enforcement case, the SEC acknowledges they didn’t “determine” anything, but the crypto markets – under pressure – interpreted the filing as such, causing massive damage to retail holders and now the SEC affirms that no determination has been made about XRP and it didn’t order or ask anyone to halt trading / delist, so retail holders shouldn’t blame the SEC but instead – wait for it – blame the exchanges! So who are they protecting?!