20 Sep 2019 Samantha McLauren
Ripple Dodges Securities Questions And Asks For Lawsuit Dismissal
Ripple has been at the crosshairs of Bradley Sostack for over a year. Sostack and a group of individuals filed a consolidated complaint against Ripple for not registering the XRP coin, thus – violating registration provisions of federal and state securities laws.
This is the sixth consecutive filing against Ripple in California's state court, after a year of accusations against the cryptocurrency and Ripple Labs.
The first set of filings were done in May 2018, after investor Ryan Coffey filed the first complaint against Ripple Labs and its CEO Brad Garlinghouse.
Ripple, on the other hand, filed a motion to dismiss the accusations, stating that Sostack's claims are made after the three-year deadline of the initial offering, dating 2013. The late allegations mean the statute of repose has expired. Furthermore, Ripple states that the plaintiff "has no solid evidence" that he purchased coins during Ripple's ICO, as well as not proving that Sostack bought the coins directly from Ripple Labs.
In the motion, Ripple has made clear that since XRP is a currency, it cannot act as an "investment contract."
"XRP isn't an investment in Ripple Labs, and there is no connection between the company and the XRP coin purchases. The ledger technology behind XRP is decentralized", the motion states.
In the footnote of the motion, Ripple adds that since XRP is a currency and not an investment option, the California state court does not need to determine "whether XRP is a security. "
Ripple also clarifies that the U.S. Departments of Treasury and Justice both stated that XRP is a "convertible virtual currency."
Ripple's lawyers unite around the thesis that Bradley Sostack missed the deadline for filing complaints. Ripple offered their XRP to the public from 2013 to 2015, which means the statute of repose expired as of 2016.
Also, Sostack didn't participate in the ICO and bought his XRP through a secondary trading exchange platform. Ripple's lawyers want the filing to be dismissed with prejudice, meaning Sostack and the other Plaintiffs can't re-file the same suit.
Despite Ripple's confidence about the case, the company's legal team expanded with Kathleen Hartnett and Damien Marshal from Boies Shiller Flexner LLP. They will work with John Neukom, Virginia Milstead, and Peter Morrison form Skadden Arps.
Former director of SEC's Division of Enforcement, Andrew Ceresney also joined Ripple's team. He represented Ripple in the first set of filings by Ryan Coffey.
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