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U.S. Court “Partially” Dismisses Class Action Against Nexo Over Its “Wrongful” Suspension of Ripple (XRP)

Legal

thecryptobasic.com 24 August 2022 09:36, UTC
  
Reading time: ~2 m

Despite partially dismissing the class action, the court ruled that Nexo must face claims of wrongfully suspending XRP support on its platform without duly informing users.


U.S. District Judge Beth Labson Freeman recently dismissed a class action filed against crypto lending platform Nexo Capital by a Ripple (XRP) holder. Despite dismissing the lawsuit, Judge Freeman ruled that Nexo must face other claims in a fresh suit for wrongfully halting support for XRP without duly informing users. 

According to a recent report by legal news service Law360, Judge Freeman struck out the suit for now because Junhan Jeong, the plaintiff, failed to show a class action waiver, as contained in Nexo’s terms and conditions, should not apply. 

Judge Freeman said in the ruling that Jeong did not adequately show that Nexo’s provision was ambiguously stated to understand. 

Plaintiff Given Another Chance to Amend His Claims

However, the California District Judge was generous enough to give the plaintiff leave to amend his claims, Law360 added. 

Commenting on the development, attorney Ted Normand of Roche Freedman LLP, Jeong’s legal representative, said: 

“We’re happy the court agreed with us on the merits, and we look forward to showing that the case should proceed as a class action.”

The California District Judge refused to completely throw out Jeong’s claim under California’s Unfair Competition law, Law360 stated. 

Details of the Lawsuit

Notably, Jeong filed a lawsuit against Nexo in April 2021. Plaintiff claimed that the cryptocurrency lending platform’s suspension of XRP caused its customers damage worth $5 million. 

The plaintiff alleged that Nexo halting support for XRP without any prior notice is a breach of its contract. He added that the crypto lending platform also went as far as selling the Ripple coins Nexo customers used as collateral and kept the profit for itself. 

Law360 adds:

“In keeping Jeong’s breach of contract claim, Judge Freeman said Monday that Jeong added allegations in his latest complaint indicating Nexo acted in bad faith regarding the suspension, including by offering to sell plaintiff’s collateral back to him after purporting to effect the suspension because of the regulatory uncertainty surrounding XRP.”

An Effect of Ripple vs. SEC Lawsuit

It is worth noting that the case is part of the charges filed against Ripple by the Securities and Exchange Commission (SEC). Recall that the SEC charged Ripple in December 2020 for offering unregistered securities offering in the United States via its 2013 Initial Coin Offering (ICO). 

Following the charges, Nexo immediately halted support for XRP without considering users who may have provided the cryptocurrency as collateral. 


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