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SEC’s vs. Ripple Next Chapter Begins Today

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by Teuta Franjkovic · 3 min read
SEC’s vs. Ripple Next Chapter Begins Today
Photo: Marco Verch / Flickr

Now it may seem that the battle on “whether XRP is a security” will never end for Ripple.

Today the next chapter of a long-running and closely watched lawsuit against Ripple will happen. The plaintiff, Bradley Sostack, has time until the end of this Monday to file a response to the startup’s September 20 motion to dismiss. If the case won’t be entirely dismissed, it will probably go into discovery next year.

As we already reported, the main point of this dispute is the question of whether Ripple’s cryptocurrency XRP is a security or not.

If it is, that means that it should have been registered under the U.S. law. That could put Ripple at risk of possible enforcement actions by regulators.

However, Rebecca Rettig, a partner at FisherBroyles thinks the suit is not likely to be settled that quickly.

She said:

“No one’s finding out whether XRP is a security anytime soon, if ever, at least through this proceeding.”

Rettig added that claiming that XRP is not a security would be “too risky of a strategy.”

Stephen Palley, a partner at Anderson Kill said the defense team crafted “a solid motion.” “The defense lawyers have done a good job so far,” explained he. “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.”

He claims that something can be a currency and still be a security or investment contract under the securities law at the same time.

He then mentioned to the U.S. Securities and Exchange Commission’s ongoing legal battle with Kik Interactive, the company affiliated with the Kin cryptocurrency.

Paul Godfrey, a Florida-based lawyer, said that Ripple made “both a statement and a legal conclusion in its introduction,” adding that the introduction to the filing said, “the crux of plaintiffs’ claims is the false assertion that XRP is not a currency, but rather security. Ripple does not advance any argument to prove such a denial … Accordingly, it is addressed, but not argued.”

In the expected filing , the plaintiff can try to move with the case in a few different ways.

Godfrey noted the possible discovery process could help the plaintiffs prove did they or not bought XRP from Ripple.

Godfrey mentioned self-called Bitcoin creator Craig Wright’s recent legal fight with the estate of Ira Kleiman, commenting that the judge cited the “evidentiary trail” Bitcoin transactions provide. The same goes for both XRP and the Interledger protocol that allow every transaction to be traced.

Palley added that at least considering immediate litigation, the claim is limited to a “you didn’t register here” argument, but there can be law accusations of fraud as well.

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