San Francisco-based blockchain startup Ripple Labs has been fighting a long battle over the claims of XRP as securities. Much recently, the company removed a pending lawsuit pertaining to XRP’s regulatory nature, to a federal court. The Ripple executives argued that the class action lawsuit was initiated by several investors beyond geographical boundaries. As a result, the case should now move to the federal court.
Attorney Peter Morrison supporting Ripple Labs has retaliated on the charges of XRP as securities. Morrison cited that lawsuit also involves an Israeli resident, hence it should be moved under the ambit of international cases. Having faced multiple lawsuits, Ripple Labs is trying to make persistent efforts to streamline the case and fight all the similar allegations in a singular manner.
In August itself, the California Superior court deemed the lawsuit as a “complex litigation”. This helped Ripple Labs to prevent the duplication of efforts as well eliminating the possibility of different results in different cases but of similar nature.
Leveraging the Class Action Fairness Act
Leveraging the Class Action Fairness Act, Morrison presented three points for the removal of the lawsuit from state courts.
“A putative class action may be removed to the appropriate federal district court if (1) the action purports to be a ‘class’ action brought on behalf of 100 or more members; (2) any member of a class of plaintiffs is a citizen of a state different from any defendant; and (3) the amount in controversy exceeds $5 million.”
Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, praised Ripple Labs for its decision to move the lawsuit to the federal court calling it a brilliant tactical move. As reported by Law.com, Chervinsky said:
“Ripple’s legal team showing some tactical brilliance here. It’s hard to explain the procedural maneuver in one tweet & I’m not going to thread this, but suffice to say it’s a seriously crafty attempt to go federal. Might not work, but slick regardless.”
According to Chervinsky, even if the class action lawsuit stayed in the state court of California, it could still cover a nationwide lawsuit. However, according to the lawyer, the company needed a reason to move to the federal court. The lawyer further states that Ripple Labs legal team finds the odds of winning this lawsuit to be higher in the federal court. Hence it took this significant effort in removing this case.
It would be a big victory for Ripple if the federal court would rule the lawsuit in favor of the company. It would bring a huge clarity on the regulatory nature of the cryptocurrency. More importantly, it would clear all doubts regarding XRP is not a security.