XRP Security Related Lawsuit Is Making Waves against Ripple in California
If Judge Phyllis Hamilton will decide that Ripple is breaking the U.S. law with its token offerings, this could tank the 500 billion economy to the bottoms of the cryptocurrency market, after possible panic-sell.
On 4 December, Ripple had asked the Chief District Judge Phyllis Hamilton of the Northern District of California to dismiss the case against cryptocurrency. The representatives are saying that the lawsuit sent to court by the angry Ripple investors is not relevant. Because there was a three years time period when the documents could have been sent.
Ripple Buyers Will Wait For the Judge to Make Final Decision
Originally filed on 5 August 2019, the lawsuit by plaintiff Bradley Sostack claims that the inventors from San-Francisco used the Ripple cryptocurrency to lead him to lose all his money. Back in January 2018, he bought 128,979 XRP (approx. $307,700) with Bitcoin and Tether. Then, during a week, he noticed that the price per coin is moving down, and his capital is melting. Bradley then sold all the coins while losing $118,100 in XRP assets.
#Ripple & @BGarlinghouse’s motion to dismiss was “taken under submission” by the Court Judge meaning she will issue a ruling at a later date
Idk how the legal system works but this could take days, weeks or even months pic.twitter.com/HYucvrcA5M
— XRPcryptowolf (@XRPcryptowolf) January 15, 2020
Sostack is not alone in his troubles – there are several plaintiffs and he acts on their behalf. All of them are the traders who lost the money in Ripple and want revenge. The main problem is that there is no clear understanding of whether XRP is a commodity or a security.
Heath Tarbert is serving as a chairman at the Securities and Exchange Commission (SEC). During a fresh Cheddar interview, he did not specify whether XRP is a security or a commodity:
“Part of the issue is that our jurisdiction we share with the SEC. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours. So we’ve been working closely with the SEC over the last year or so to think about which falls in what box.”
Sostack claims that the Ripple Labs specialists have deliberately seduced him into buying the tokens when the price was high. Then, when it began falling, they gained profits while the trader lost his money.
Boies Schiller Flexner, a representative of the Ripple Labs, claimed that a three-year deadline has passed. The plaintiffs have no right to demand compensations, according to the Securities Act.
The XRP coins were ‘minted’ back in 2013, defendants say. Hence, even if a bunch of investors lost money, its all OK because the three years period has already over. In the opposition to the legal motion of dismissal, Ripple representatives say that the application is ‘twisted’. Damien Marshall, who works in New York’s Ripple office, said:
“There’s always going to be tension between the remedial function of the law and the statute of repose. That’s the nature of repose, it is a limitation on continuing liability. That is the congressional intent.”
Oleg Elkhunovich who defends the interests of the trader Susman Godfrey, says that the motion to dismiss cannot solve the problem. Ripple supposed to issue the appropriate offering to the investors back in 2013. Also, they may have been selling the tokens during the years, which is a factor that shifts the repose starting date:
“An offering to the public is not enough. It has to be the type of bona fide public offering that would put the public on notice”
Ripple Don’t Care Which Rules Control the Securities and Commodities Markets
Interestingly, the Ripple representatives don’t tell the public when they have created the tokens for sale. The judge asked the defendants:
“You’re suggesting that I rely on what you say instead of what you pled because it’s inaccurate? Given how careful you’re being about the characterization of sales to the public, it’s the essence of your argument, why did you include that in your complaint?”
Ripple representative admitted, that Ripple’s deliberate silence regarding announcements of any specific data about their public sale is a very bad and incorrect practice.
Jeff Fawkes is a seasoned investment professional and a crypto analyst covering the blockchain space. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
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