Ripple (XRP) Files Notice Of Removal To Move Up Its Class-Action Lawsuit To Federal Court
According to the official court document published on Wednesday, November 7th, 2018, Ripple has asked for the lawsuit against it and its management to be moved from San Mateo Superior Court to the U.S. District Court of the Northern District of California.
Three prerequisites for the removal (and some more)
As the main reason for such a move, Ripple’s lawyers cite the U.S. Class Action Fairness Act (CAFA), which says that in case when more than 100 plaintiffs, of which at least one is a citizen of a different state than the defendant, are prosecuting for more than $5 million of compensation, the case can be moved to a higher court.
Ripple’s lawyer, Stephen Palley, a partner at the Anderson Kill law firm, emphasized that this lawsuit has all three prerequisites fulfilled to be moved to the District Court.
He deduced that in their combined legal complaint, Avner Greenwald, David Oconer and Vladi Zakinov stated that they are filing “on behalf of all California citizens who purchased or otherwise acquired XRP from January 1st, 2013, to the present,” which makes a good foundation for the removal.
Defending Ripple Labs, XRP II, Bradley Garlinghouse, Christian Larsen, Ron Will, Antoinette O’Gorman, Eric van Miltenburg, Susan Athey, Zoe Cruz, Ken Kurson, Ben Lawsky, Anja Manuel, and Takashi Okita, Palley also pointed out that the amount plaintiffs are asking as a compensation for their alleged losses was $167.7 million, which by far exceeds $5 million required.
Furthermore, Avner Greenwald is a citizen of Israel, and as such doesn’t share a state with defendants, which is, according to Palley, yet another reason to ask for the removal of the lawsuit from the San Mateo Superior Court.
“The conventional wisdom is that state court juries and judges tend to be more sympathetic to plaintiffs,” said Palley while explaining the situation to a crypto news outlet, adding that state judges can sometimes be political as some of them are being elected and that therefore, Ripple and co-defendants are looking to seek justice at the higher instance US court.
Accused of selling unregulated securities
Ripple also gave a hint of their defense strategy in the mentioned document.
They pointed out that plaintiffs do not accuse them of lack or misleading information regarding the sale of their XRP cryptocurrency. Instead, they claim that Ripple was required to register XRP with the SEC, which they failed to do.
“Plaintiffs do not allege that they lacked information about the nature of these transactions. Nevertheless, Plaintiffs claim that they were somehow injured because Defendants were allegedly required to register XRP as a security with the Securities & Exchange Commission (SEC) but failed to do so.”
XRP still hasn’t been proclaimed to be a security by the SEC. However, contrary to Ether (ETH) and Bitcoin (BTC), it also hasn’t been defined not to be a security, so it will be interesting to see which precedent, if any, will the court take as the basis for their eventual final decision.
Ripple claims not to be connected to XRP
Meanwhile, Ripple published a statement in which they are trying to differentiate themselves from XRP saying that the coin, which they hold 50 billion of, is an entity of its own, entirely detached from the company.
Ripple also claims that the company was founded after XRP came into being and that all those tokens were given to them in order to be used for the network’s security and liquidity.
However, as xbt.net previous reported, Ripple is selling XRP tokens out of their escrow accounts, so if the SEC rules XRP to be a security, plaintiffs will have a good case against the blockchain and cryptocurrency industry’s giant.