Ripple can breathe a little easier after an XRP investor’s case was dismissed. The case alleged that Ripple used dishonest and illegal tactics to control the price of XRP.
To Be or Not to be a Security?
Yesterday the US Northern District of California court denied a remand application for a lawsuit filed against Ripple Labs Inc. by issuing an ‘Order Denying Motion to Remand.’ The case was originally brought forth by XRP investor Ryan Coffey in a San Francisco court on May 3rd, 2018, and his application for a remand was essentially an attempt to keep the case in California lower courts rather than have the case decided in Federal courts.
Coffey sought damages for financial losses accrued from investing in XRP. The lawsuit was based on the premise that Ripple manipulated XRP value through the constant issuance of salacious and sensational media promotion of the cryptocurrency, while also turning a blind eye to the California Corporations Code and “obscuring the role of the security.”
The plaintiff and lawsuit also accuse Ripple CEO, Brad Garlinghouse, of misleading investors through his explanation of how Ripple products and XRP are used to “Market and increase the value of XRP.” The plaintiff further argued that Ripple and the XRP product are not truly decentralized and asserts that Ripple may have violated federal securities laws through the sale of XRP tokens.
After considering each side, the court issued the following statement:
[W]hen an anti-removal provision such as Section 22(a) is invoked, the threshold question is whether removal is being effectuated by way of the general removal statute, 28 U.S.C § 1441(a), or by way of a seperate removal provision that “grants additional removal jurisdiction in a class of cases which would not otherwise be removable under the prior grant of authority.” If removal is being effectuated through a provision [like § 1453,] that confers additional removal jurisdiction, and that provision contains no exception for non removable federal claims, the provision should be given full effect.
Afterward, the court ruled in favor of the defendants. The order read:
Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby DENIES plaintiff’s motion,”
No Stranger to Controversy
Ripple is no stranger to lawsuits as there are already two lawsuits being handled in the federal courts. It’s plausible that Coffey and the Rosen Law Firm sought to keep the case in California as a federal court decision that is favorable to Ripple would possible set a nationwide precedent and invalidate similar cases being considered in the lower courts.
Do you think XRP should be classified as a security or not? Share your thoughts below!