Ripple has been involved in a class-action lawsuit for a few years now. The plaintiffs, Vladi Zakinov, Avner Greenwald, and David Oconer, are claiming that XRP is a security and, consequently, Ripple has broken the law by issuing and selling these coins without properly complying with securities laws. The plaintiffs are also claiming, that since Ripple has broken the law with XRP, then they must refund and compensate every person who has ever purchased the digital asset.
Ripple, the defendant, had filed a motion to dismiss the lawsuit in September 2019. In their motion, the company’s attorneys’ have stated that in 2015 the U.S. Departments of Justice and Treasury had recognized XRP as a “convertible virtual currency” and they, therefore, will not be arguing that XRP is not a security, as they see it as an established fact.
Instead, the motion to dismiss is attacking the plaintiffs on technicalities, such as the plaintiffs did not file the case on time and that none of them had purchased XRP directly from the company Ripple.
The judge’s decision has not come out yet and may take months before further developments surface. If the motion to dismiss is granted, then no further lawsuits can be drawn against Ripple by private plaintiffs for this matter anymore. Nonetheless, the SEC is not a private plaintiff and has not yet commented on the matter, therefore regardless of the motion to dismiss being granted or not, the SEC can take Ripple to court for the same matter at any point in time.
Conversely, if the motion to dismiss is denied, Ripple will likely have to make a costly settlement offer or stay in courts for, possibly, a very long time.
The issue as to whether XRP is a security is currently only an issue in the United States of America. The United Kingdom’s financial watchdog, the FCA, had already deemed the asset to not be a security.
Image licensed via Shutterstock