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Ripple files motion to dismiss a lawsuit that claims XRP is a security
September 20  |  2 min read

Ripple Seeks to Dismiss a Lawsuit That Implies XRP Is a Security

The COIN360 Editorial Team

Ripple has filed a motion to dismiss a lawsuit, initiated by law firms Susman Godfrey and Tayler-Copeland Law, wherein Ripple, its subsidiary XRP II, and its CEO Brad Garlinghouse are accused of violating securities law by selling XRP.

Despite the fact that the question of whether XRP is really a security is only partly touched upon in the document, this uncertainty is at the heart of the latest lawsuits which started back in early 2018.

Answering to the plaintiff’s accusations of selling an unregistered security, Ripple replied that XRP is not “an investment contract,” and, therefore, is not a security by law, rather, it insists that “XRP is a currency”:
“Purchasing XRP is not an ‘investment’ in Ripple; there is no common enterprise between Ripple and XRP purchasers; there was no promise that Ripple would help generate profits for XRP holders, and the XRP Ledger is decentralized.”

The argument further states that XRP has been confirmed to be “convertible virtual currency” by the federal Departments of Treasury and Justice:

“This is consistent with the CFTC’s position that virtual currency is a commodity.”

As for the actual case, Ripple’s lawyers argue that the case should be dismissed, as the plaintiff did not initiate a case within 3 years of the ICO. Moreover, the filling insists that the fact that the plaintiff had purchased XRP via a secondary trading market, is crucial for dismissal.

Ripple also seeks to dismiss the plaintiff’s consumer protection law claims under California state law on the grounds that the nature of the accusation is rather a subject of federal law. Since the complaint is built on a securities law violation, Ripple’s lawyers insist that it should be dismissed without the chance to re-file suit.

The hearing on the case is scheduled for early next year.