Ripple Snubs ‘Security’ Claims In Motion to Dismiss Lawsuit

Wilfred Michael 

Wilfred Michael

News reporter

20 September 2019,
08:38
Ripple Snubs ‘Security’ Claims In Motion to Dismiss Lawsuit

Ripple has filed a motion to dismiss a lawsuit claiming that its sale of XRP tokens was a violation of California and federal securities law. 

Stmarket.co had reported upon the initial lawsuit’s filing that the plaintiffs referred to recently published guidance by the U.S Securities and Exchanges Commission (SEC) to prove that XRP was a ‘security.’

However, Ripple in its response notably failed to address in the filing why XRP is not ‘security,’ but focused on the fact that the plaintiff Bradley Sostack did not have the standing to sue the company in the first place.

Specifically, Ripple’s attorneys argued that Sostack failed to bring the matter to the court’s knowledge within three years after the startup’s initial coin offering in 2013. 

In other words, Ripple alleged that he had lost the legal rights (statute of repose) to sue the company given the number of years that have passed since the token sale, assuming he had bought in at that time.

“The Securities Act claims in the Complaint, filed August 5, 2019, are therefore untimely and barred by the statute of repose,” the filing acknowledged

Meanwhile, another argument presented by Ripple is that the plaintiff did not “plausibly allege” that he bought XRP during the initial offering, neither di he “plausibly allege” that it was Ripple that directly sold the tokens to him.

With that point, the filing adds that “the necessary inference is that he bought and sold XRP through a secondary trading exchange,” and not directly from Ripple.

Ripple’s filing also cited comments from “the federal Departments of Treasury and Justice publicly concluding “that XRP is a ‘convertible virtual currency,'” in its “factual background” section. 

“This is consistent with the CFTC’s position that virtual currency is a commodity,” Ripple wrote before suggesting in the concluding section that the plaintiff should not be given another chance to amend or refile the lawsuit.

“Leave to amend should be denied because amendment would be futile,”  the filing concludes.

To be clear, although Ripple’s motion to dismiss could be granted, the filing mentions that a hearing on the matter could take place on January 15. 2020. Meanwhile, the latest development also represents the first time that the company is responding to an allegation by token holders who claim that the token violates securities law since it wasn’t registered with the U.S SEC as a ‘security.’
 

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