Ripple Files Last Bid to Dismiss XRP Securities Lawsuit Before Court Meeting

Even if XRP were a security, the investors suing Ripple brought their case far too late for it to proceed, the company said in a new filing.

AccessTimeIconDec 5, 2019 at 9:30 p.m. UTC
Updated Aug 18, 2021 at 11:50 p.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

Even if XRP were a security, the investors suing Ripple brought their case far too late for it to proceed, the company said in a new filing.

Further, subsequent arguments made by the plaintiffs contradict their original claims, Ripple said in the Dec. 4 filing with the U.S. District Court for the Northern District of California.

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • It's the latest document filed in the back-and-forth since a federal court appointed Bradley Sostack the lead plaintiff in the ongoing case. Sostack filed his initial amended complaint in August 2019. The plaintiffs claim the company sold XRP as an unregistered security to retail investors. 

    The filing largely reiterated arguments Ripple made in an earlier motion to dismiss the case: that the amended complaint filed in August missed a legal deadline to pursue claims after an event; that the lead plaintiff still hasn’t been able to show that he bought XRP from any of the defendants (or during an initial offering); and that the claims that XRP is a security conflict with the plaintiff’s claims under California’s state consumer protection law.

    As such, Ripple once again has sidestepped the most important question the case poses for the digital asset industry: whether XRP, the third largest cryptocurrency by market capitalization, is a security under U.S. law.  

    "XRP is not a security, but that is irrelevant for purposes of this motion. Even if XRP were a security, Plaintiff's claims still fail as a matter of law,” the filing said (emphasis from the original document).

    The filing is the last before the parties meet in court next month to argue over the motion to dismiss. 

    Ship has sailed?

    Despite the plaintiff's claims that Ripple’s engaged in an ongoing offering of securities, the filing said, Ripple first began selling XRP in 2013, meaning any case brought after the three-year statute of repose should be dismissed.

    “The Court’s passing reference to the statute of repose running ‘from the defendant’s last culpable act (the offering of the securities),’ ... does not upend the ‘first-offered’ rule,” the filing said, referencing a number of other court cases which supported this argument.

    The statute of repose argument was successfully used by defendants in a number of mortgage-backed securities cases several years ago, Rebecca Rettig, a partner at FisherBroyles, previously told CoinDesk.

    Ripple reply also took aim at a line in the plaintiff’s response, filed Nov. 4, which said “Ripple issues new XRP from escrow for the first time each month for sale to the public.”

    According to the Dec. 4 filing, this argument contradicts the plaintiff’s original amended complaint, which said “all 100 billion XRP were created out of thin air by Ripple in 2013, prior to its distribution to investors.”

    (A bullet point in the new filing further claims that the modifications plaintiff alleged changed XRP were actually made to “Rippled,” the software underpinning the XRP ledger.)

    The filing also takes aim once again at claims that Ripple sold the XRP to the plaintiff, claiming that there was a “one-in-ten-thousand chance” that this could have occurred. 

    According to the filing, “Ripple’s alleged exchange sales of XRP accounted for .095 percent—less than one-tenth of one percent—of the total volume of XRP sold on exchanges” during the time period Sostack said he bought XRP.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.