“Tokens may have mixed features that may overlap with the above categories, or change over time. For example, Ether can be used as a means of ‘payment’ (exchange token) on the Ethereum platform, and can also be used to run applications (utility token). XRP has similar features.”
The paper further mentioned utility token, exchange token, and security tokens as the three categories.
Moreover, this is an important classification for the San-Francisco based firm which is currently facing a class-action lawsuit in the U.S with the complainant claiming that the company went against state and federal laws by selling XRP as an unregistered security.
According to Jake Chervinsky, who is well-known in the crypto community for his views on blockchain-related cases and exchange-traded funds, Ripple will likely issue a motion to dismiss, when the time is right.
“The Ripple securities class action took a step forward this week, as the court set a schedule for roughly the next year of litigation. Here’s an update on where the case stands, what’s next, and when we’ll answer the question that never dies: ‘is XRP security?’
He then added that:
“As a refresher, the plaintiffs in the case allege that XRP is unregistered security and that Ripple broke the law by issuing and selling it to the public. The plaintiffs say every class member – meaning every XRP purchaser – is entitled to a refund, plus compensatory damages.”
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