Judge Rules Securities Lawsuit Against Ripple To Remain In U.S. Federal Court


A judge in the U.S. has ruled that a class action lawsuit against San Francisco-based payments firm Ripple must remain in the federal court.

According to one legal expert, this is a development that will likely give the company a slight advantage ahead of any future proceedings.

In the Thursday, February 28 ruling, U.S. District Judge Phyllis Hamilton, of the Northern District of California, ruled that the lawsuit against Ripple, its subsidiaries and other individuals affiliated with the company would not be moved to a lower court after lawyers representing the company moved to the district court in November last year.

Jake Chervinsky, an attorney at Kobre Kim, tweeted that the court’s ruling represents a “minor but meaningful victory” for Ripple, later adding that the payments firm has “fought hard” to have the lawsuit handled at the federal court level.

Per the court document, a previous explanation had noted that due to their nature, “interstate class actions typically involve more people, more money, and more interstate commerce ramifications than any other type of lawsuit,” and as such, cases of this nature “properly belong in federal court.”

The lawsuit revolves around the XRP token, with plaintiffs alleging that Ripple offered the token as an unregistered securities offering. Ripple has countered that that isn’t the case and is a defendant alongside its subsidiary XRP II and CEO Brad Garlinghouse.

As per the ruling, parties in the case now have 14 days in which they will hold a meeting and determine how they want to proceed with the litigation.

Both parties also have 30 days within which the plaintiffs can revise and file an amendment that consolidates the original complaint. Ripple also has the same timeframe within which it will either file a motion to dismiss the litigation or notify the court that it won’t be doing so.

Chervinsky believes that though Ripple has attained a slender advantage in terms of the case’s jurisdiction, the case is likely to take years before going to trial.

It is expected that the lawsuit will have to go past several stages, including a possible motion to dismiss, before proper litigation begins.

He notes that Ripple is likely to present an argument on the basis that the complaint isn’t “a legally cognizable claim as a matter of law.”

Past such a motion or lack of it, the plaintiffs could proceed to file for class certification- a motion that the court will have to grant.

Once this is done, then the case moves to a discovery stage where, among other things, plaintiffs and defendants proceed to exchange documents and conduct depositions.

Even then, the case would not be proceeding to trial until motions such as summary judgment are dispensed with, and a judge determines that it is now ready for trial.

The lawsuit was filed in May last year, but as things stand, there has been very little litigation if at all.

Plaintiffs allege that Ripple and the other defendants’ actions violated the Securities Act as well as the California Corporations Code, and therefore want the courts to declare all XRP sales as unregistered securities.

Notably, Ripple is yet to file a substantive response to these complaints, which is one reason the case might delay for months or even years.

Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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