Although the court has partially dismissed a class action lawsuit against cryptocurrency exchange Nexo, the platform still faces claims from customers. The case concerns the suspension of support for XRP tokens, without prior notice to their owners.
Cryptocurrency exchange Nexo still with problems
US District Court Judge for the Northern District of California, Beth Labson Freeman, has decided to dismiss a class action lawsuit filed against lending platform Nexo. The claims against Nexo were brought by holders of XRP tokens, whose trading was abruptly suspended. Despite the dismissal of the lawsuit, the judge decided that the lending platform must face other, and new, claims. The reason for this decision is that the plaintiff, Junhan Jeong, failed to show that Nexo’s regulations were so ambiguous as to result in comprehension problems. Nevertheless, the plaintiff was given a second chance to amend his claims.
Jeong’s legal representative, Ted Normand of Roche Freedman LLP, commented on the matter with these words:
“We are happy that the court agreed with us on the merits and look forward to showing that the case should proceed as a class action.”
A district judge in California refused to dismiss Jeong’s lawsuit altogether, arguing the case under California’s unfair competition law.
Details of the legal battle
Jeong filed the lawsuit against Nexo back in April 2021. One of the arguments he made at the time was that the suspension of trading in XRP tokens, had caused damage to his customers, totalling $5 million.
Thus, in his view, Nexo’s suspension of XRP trading, without first informing its customers, is a breach of the existing contract. An additional accusation is the indication that Nexo representatives made sales of XRP coins belonging to customers. In turn, they were to keep the profits from the transaction for themselves.
The case is being looked into by representatives of the Law360 portal, who report:
“In upholding Jeong’s breach of contract claim, Judge Freeman said on Monday that Jeong added allegations in his most recent complaint showing that Nexo acted in bad faith with respect to the suspension, including offering to sell the plaintiff’s collateral back to him after allegedly making the suspension due to regulatory uncertainty around XRP.”
Aftermath of SEC lawsuit against Ripple
The Nexo case stems from the events surrounding the SEC vs. Ripple. The XRP token issuer was accused in December 2020, of offering unregistered securities through an Initial Coin Offering (ICO) that took place back in 2013. As a result of these events, a number of exchanges across the United States suspended XRP trading. As can be seen, the manner of the suspension, on different platforms, took place in different ways.