Ripple Labs Files to Move Class Action Lawsuit to Federal Level

Ripple (XRP) investors are suing Ripple Labs for failing to register as a security before its token offering, in addition to claims that CEO Brad Garlinghouse has been manipulating the price to maximize sales profits, according to This is one of many cases made against the digital asset company.

Ripple Labs’ Defense Strategy

However, Ripple Labs is attempting to move the lawsuits from a state level to a federal court. Attorneys claim that the cases match the criteria required to move to a higher court. If accepted, the case will move from the San Mateo Superior Court to the U.S. District Court, Northern District of California, as revealed by court documents last Wednesday. Ripple’s counsel also revealed their defense:

“Plaintiffs do not allege that they lacked information about the nature of these transactions. Nevertheless, Plaintiffs claim that they were somehow injured because the Defendants were allegedly required to register XRP as a ‘security’ with the Securities & Exchange Commission (‘SEC’) but failed to do so.”

Litigation partner of Skadden, Arps, Slate, Meagher & Flom, Peter Morrison, detailed the requirements. Morrison states that a class action lawsuit can be removed to a suitable court assuming that “(1) the action purports to be a ‘class’ action brought on behalf of 100 or more members; (2) any member of a class of plaintiffs is a citizen of a state different from any defendant; and (3) the amount in controversy exceeds $5 million.”

The standards were established by the U.S. Class Action Fairness Act (CAFA). Over 100 members are suing Ripple Labs, and at least one plaintiff comes from a different state than the company. Finally, the total amount being sued for is higher than $5 million.

Avner Greenwald, who resides in Israel, claims that “thousands” of people lost money on an XRP investment, according to CoinDesk. Some of the lawsuits are even asking the company to pay 167.7 million in damages.

A day after Ripple published the motion to move to a federal level, plaintiffs filed their own to keep the case in the San Mateo Superior Court. Ripple Labs must respond to that remand within two weeks of it being denied, or within two weeks after the case reaches the San Mateo court, whichever comes first.

Suggested Reading Learn how to safely store your Ripple (XRP).

A Brilliant Action

As reported by Smartereum, a government securities litigation and enforcement defense attorney at Kobre & Kim revealed the expertise behind this move:

“The Ripple Labs legal team has displayed tactical brilliance here. It’s difficult (sic) explain this smart move in one tweet and I don’t want to do a thread on this issue. However, all I can say is that it is a smart move to push the matter to a federal court. Even if it might not work, it’s still strategic”.

Essentially, the move is smart because this case will become a “nationwide class action lawsuit” even if it stays at a state level.

Unfortunately for the XRP project, this battle over regulation has prevented it from being listed on exchanges like Coinbase. While the SEC has ruled that neither Bitcoin (BTC) or Ethereum (ETH) are securities, we’ve yet to see how that will work with XRP.

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