The lawsuit against Ripple by Barry Sostack would continue today, Monday November 4, 2019 despite Ripple’s September 20 motion to dismiss it. In contention is whether Ripple’s XRP is security and should have been regulated by the appropriate agency the SEC.
In the previous motion, Ripple lawyers argued that the plaintiff did not sufficiently prove that he actually bought XRP during the initial sale of the token or actually bought it from Ripple.
Legal experts say that the case though may put Ripple at risk of action from regulators but added that
“No one’s finding out whether XRP is a security anytime soon, if ever, at least through this proceeding,” said Rebecca Rettig, a partner at FisherBroyles.
The company may never need to tackle the question – at least, not to win this case. Reports say that the Ripple legal team has built a solid case by taking advantage of the technicalities in the plaintiff’s case and his arguments.
“The defense lawyers have done a good job so far,” he said. “They’ve shown some good tactical skills, they could win but even if they do there are a lot of other things that could happen.”
The Ripple legal team essentially avoided the issue of Ripple being a security which is the crux of the suit. The company did not dwell on the issue at hand but smartly used technicalities to avoid the issue, mentioning it just as a footnote at the end of its argument.
It is obvious that the lawyers are aware that arguing the issue of XRP not being a security would entail close scrutiny and so they’re avoiding that. They’re also aware that it may not pass through the court’s close attention to details of the fact.
Kik is already embroiled in similar litigation from SEC and Ripple wouldn’t want to add to its problems by going into that. The Ripple lawyers claimed that the plaintiff waited for too long before filing the suit without proof that he actually bought XRP during the Ripple ICO.
The plaintiff made reference to social media and websites in the suit. This informs Ripple lawyers making similar references.
“Usually defendants can only use the facts alleged in the complaint itself or the facts incorporated by reference in a complaint in defending against claims on a motion to dismiss. Here, however, defendants were able to use all of the facts in the documents, websites and social media posts to which the complaint cites in rebutting plaintiff’s claims” said Rettig
She cited Ripple’s use of a wiki page to support its statute of repose argument, noting that the plaintiffs originally introduced other details on the same wiki page to support their own original argument.
Never Ending Suits?
Ripple’s concern at the moment is that this may not be the last of the series of suits the company would face. There would likely be many more class actions that even if the company wins this against Sostack, others will surely follow.
“Even if Ripple wins, it’s not necessarily the end, and that’s what’s interesting and people don’t understand the relationship between civil litigation and regulatory enforcement and criminal, and class actions … it would mean something [if the case was dismissed] but it doesn’t necessarily mean it’s the end.”