Ripple says XRP is not a security, in a motion filing to dismiss a lawsuit
September 20, 2019, 6:00AM EDT
2 min read
Ripple has filed a motion to dismiss a lawsuit, saying that XRP is not a security “because it is not an ‘investment contract.’”
“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,” Ripple said in a filing published Thursday.
The firm further said that XRP is a currency. All this only in one footnote in a 37-page filing, supposed to be directly addressing whether XRP is an unregistered security. Ripple said that a court “does not need to confront” whether the securities laws apply to XRP.
In May 2018, a group of XRP investors filed a lawsuit against Ripple and its executives, claiming that they violated state and federal securities laws. Last month, the group filed an amended complaint, arguing that XRP tokens are unregistered securities under the Securities and Exchange Commission’s guidance.
In Thursday's filing, Ripple mainly argued that the lawsuit was filed too late. "Under Plaintiff’s own allegations, Defendants offered XRP to the public throughout 2013 through 2015. Accordingly, the three-year statute of repose expired as of 2016 (three years after the sales cited in the May 2015 settlement) and in no case later than May 2018 (three years after the May 2015 settlement agreement in which “Defendants acknowledged that they had sold XRP to the general public,” [...]. The Securities Act claims in the Complaint, filed August 5, 2019, are therefore untimely and barred by the statute of repose," the filing reads.
Another argument Ripple made is that it did not sell XRP tokens to plaintiffs directly. "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," it said.