Ripple Labs Pushes To Move Pending Lawsuit from State Court to Federal CourtNov 13, 2018 at 0:15
The legal team of Ripple Labs, the company behind XRP, has reportedly moved a pending securities lawsuit from a state court to a federal court to question the regulatory nature of the cryptocurrency.
They argued that the lawsuit was initiated by a group of investors with no geographical limitations and should not be handled by a state court.
Under the law, the company’s move is allowed, saying the amount of the controversy exceeds $5 million and was brought on by more than 100 members, which means it can be allowed to be heard in a federal court.
Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, praised Ripple Labs’ move and described it as “brilliant.”
“Ripple’s legal team showing some tactical brilliance here. It’s hard to explain the procedural maneuver in one tweet and 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,” he explained.
However, Chervinsky noted that if the class action lawsuit stayed in the California state court, it could still cover a nationwide class action lawsuit.
“State courts exercise jurisdiction over residents of other states all the time. It’s not unusual for a nationwide class action to be resolved in state court. Also, the Securities Act of 1933 gives state and federal courts concurrent jurisdiction over private civil claims,” he stated.
The government lawyer mentioned that Ripple Labs’ move can be due to its belief that the chance of winning the class action lawsuit is higher in federal court than in state court.
Notably, if the United States federal court allow Ripple Labs’ plan to move the lawsuit, it is expected to finally provide clarity on the regulatory nature of XRP and prove that it is not considered a security under existing laws.
Last August, Ripple Labs managed to convince a trial court to consolidate multiple lawsuits condemning the company for its alleged use of XRP tokens as a security into a single case.
As of this writing, XRP is traded at $0.5049 a piece, up by 0.26 percent and a market cap of $20.3 billion.