Payments startup Ripple has recently filed a motion to dismiss a lawsuit against it, which alleged that XRP falls under the category of unregistered securities.
The court filings uploaded by Coindesk shows that the attorneys of the firm defended the claims according to which the California-based company violated the United States securities law by selling XRP tokens. Per the motion, the plaintiff does not have the standing to file a complaint against the blockchain startup.
However, the company failed to respond to the arguments over the concerns of XRP being unregistered security.
“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 filing stated.
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The case against Ripple was brought in by Bradley Sostack, a digital asset investor.
No arguments on not being securities
Ripple argues that the Sostack failed to bring a case against the company even after three years of the XRP token sale and thus lost his statute of repose.
“… under Plaintiff’s own allegations, Defendants offered XRP to the public throughout 2013 through 2015. Accordingly, the three-year statute of repose expired as of 2016 (three years after the sales cited in the May 2015 settlement) and in no case later than May 2018 (three years after the May 2015 settlement agreement in which ‘Defendants acknowledged that they had sold XRP to the general public,’ Complaint ¶ 25). The Securities Act claims in the Complaint, filed August 5, 2019, are therefore untimely and barred by the statute of repose,” Ripple’s attorneys stated in the filing.
Though Ripple is in denial to admit XRP’s categorization as securities, the allegations have alarmed the regulators and also a part of the crypto community. In addition, other concerns regarding the controlling of the XRP tokens by the company’s executives are also growing.
“They make twelve separate arguments for dismissal of the plaintiff’s claims. Not a single one squarely addresses whether XRP is an unregistered security,” Jake Chervinsky, a crypto-focused lawyer, noted on Twitter.