San Francisco-based blockchain startup has been having a tough time this year with several investors complaining over the nature of XRP being a ‘security’. Recently, Ripple has moved to the court to dismiss the claims that it has violated any U.S. Securities laws.
In its motion to dismiss, Ripple claims that Bradley Sostack, the plaintiff, doesn’t have any standing to register a complaint and claim that XRP is a ‘security‘. Further explaining, Ripple stated that the plaintiff failed to file any case within three years of XRP launch i.e. 2013.
On the other hand, Ripple says that plaintiff fails to prove that he purchased XRP during the ICO. Furthermore, the plaintiff also did not allege that any defendants have sold him any XRP tokens. “The necessary inference is that he bought and sold XRP through a secondary trading exchange,” Ripple filing states.
Thus, Ripple stressed on the fact that XRP is not a security because it isn’t an “investment contract“. The filing by Ripple states:
“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.”
XRP Is a Currency, Not Security
Ripple also draws an important fact into the picture. It states that the federal Departments of Treasury and Justice publicly concluded that XRP is a ‘convertible virtual currency’”. Thus, Ripple says that so XRP doesn’t fall under the securities law. The filing notes:
“This is consistent with the CFTC’s position that virtual currency is a commodity. Nonetheless, Plaintiff alleges that XRP is a ‘security’ under federal and state law, … and that Defendants have offered and sold XRP despite its non-registration with securities authorities.”
However, there are new suspicions already making rounds against Ripple’s lawyers for dismissing the motion, saying that Ripple has yet not addressed the securities aspect of XRP at all. A section reads:
“Because of the multiple, independent grounds for dismissing this action, the Court need not resolve whether XRP is a security or currency for purposes of this Motion, which assumes Plaintiff’s allegation that XRP is a security.”
On the other hand, Ripple has been recently facing the dissent of its investors on its practice of dumping XRP tokens in the market. Investors said that Ripple’s practice is hurting the price of XRP which has failed to give any returns to investors despite the crypto market rise of 2019. Recently, Ripple Lab’s wallet sent 100 million XRP tokens worth $26 million at the market rate to the company’s co-founder Jed McCaleb.
At the time of writing, XRP is 0,39% up making $0,292 per coin, the market cap sits at $12,6B level.