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Ripple is faced with multiple lawsuits from disgruntled clients over the sale of XRP, its native digital currency. The blockchain startup is currently embattled against a legal filing launched by plaintiff Bradley Sostack.
The case has been boiling since the summer of 2018 when Sostack and a group of other investors sued Ripple due to loss of investments. The complainants argue that Ripple and its CEO, Bradley Garlinghouse, violated the securities law by selling XRP to the general public without registering it first with the Securities and Exchange Commission (SEC).
Ripple deftly avoided the accusations and brought up a statute of repose that expired in 2016. Since the plaintiffs failed to file the case before the expiration of the statute of repose, their suit should be dismissed, CoinDesk reported.
However, Sostack argues that since Ripple is still selling XRP to the general public, it’s doesn’t exempt it from being liable. “Defendants have failed to cite any case – and indeed, no court has found – that liability for multiple offerings has been barred by the statute of repose,” Sostack said.
XRP not a security?
Garlinghouse has maintained that XRP is not a security. In a recent podcast, he said (as quoted by AMB Crypto):
“I understand the SEC has a hard job. I also think, you know, when you’re a hammer, everything’s like a nail. And I think when you’re in the SEC, sometimes everything might look like a security.”
Ripple to respond to Sostack’s filing by Dec. 4
SEC Chairman Jay Clayton previously said that barring Bitcoin and Ethereum, a lot of cryptocurrencies that are operating within this nascent industry can be considered a security. It remains to be seen, however, when the regulatory agency will decide Ripple’s fate as the lawsuit trudges on.
Investors are disgruntled that they lost money following the depreciation of XRP, with Sostack alone losing $118,100 according to a filing placed in August. Meanwhile, Ripple is maintaining that XRP shouldn’t be treated as an investment and that there were no promises made towards investors that they would acquire profits if they purchase XRP. Its response to Sostack’s new filing should be submitted by Dec. 4 and oral arguments will be conducted on Jan. 15.
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