San Francisco-based startup Ripple has filed a motion to dismiss a pending lawsuit brought against them by a group of XRP investors, arguing that the cryptoasset is not a security.
XRP Not a Security
According to the filing published on Sept. 19, Ripple denies that XRP is a security because “it is not an investment contract.”
The filing continues,
Purchasing XRP is not an “investment” in Ripple; there is no common enterprise between Ripple and XRP purchasers; there was no promise that Ripple would help generate profits for XRP holders, and the XRP Ledger is decentralized.
Unlike purchasing traditional securities, such as stocks, Ripple is arguing that it has no obligation to XRP investors despite its close association with the crypto-asset. Ripple further reiterated that XRP is a currency, and should not be considered an unregistered security by regulators and lawmakers.
In addition to arguing against XRP being a security, Ripple said the statute for the lawsuit has passed and pointed out that the company did sell XRP directly to the plaintiffs,
Countless other XRP holders in addition to Defendants (including Plaintiff, see id.) sell XRP on exchanges, making it impossible to plausibly conclude that Plaintiff purchased an initial distribution of XRP from Defendants.
The filing stems from a lawsuit brought against Ripple in May 2018 by a group of XRP investors, who claimed the company violated state and federal securities laws. The complaint was amended in August, with the group now arguing that XRP is an unregistered security under the US Securities & Exchange Commission’s (SEC) guidelines.
Featured Image Credit: Photo via Pixabay.com