Prominent Crypto Lawyer: Ripple (XRP Coin) Securities Class Action Moves Forward, But Not So Fast
Jake Chervinsky, a lawyer at global law firm Kobre & Kim that focuses on litigation involving securities, released a tweet storm talking about the class-action lawsuit against Ripple that he says will take over a year to understand if XRP is a securities asset or not.
0/ The Ripple securities class action took a step forward this week, as the court set a schedule for roughly the next year of litigation.
Here's an update on where the case stands, what's next, and when we'll answer the question that never dies: "is XRP a security?"
— Jake Chervinsky (@jchervinsky) March 22, 2019
The plaintiffs in the case have alleged that XRP is unregistered security and that every XRP purchaser is entitled to a refund plus compensatory damages because Ripple broke the law by issuing and selling it to the public.
Given the fact that the case was tied up for about nine months just to make a decision regarding if it should be in state or federal country, Ripple won't have to file a “substantive response” yet but if they do they will ‘vigorously’ deny these allegations.
The Federal court has denied plaintiff’s motions to return the case to the state, last month which has been called a minor but meaningful victory for Ripple. But it’s not all, Ripple has three phases of litigation coming up in the form of appointing lead plaintiff and lead counsel, re-filing a consolidated complaint, and responding to the complaint, as set by the court.
Glacial Pace Of Class Actions
The court has ordered for a public notice of the case that the plaintiff did on Wednesday and further gives potential class members – the XRP purchasers – 60 days that is until May 20 to file motions for appointment as lead plaintiff and approval of their lead counsel selection. The court would need time to make a decision and before this Chervinsky says
“nothing else will happen.”
From here, the consolidated complaint of legal violation committed by Ripple will be due in July, the very earliest. After the complaint is filed, Ripple will have to submit a substantive response in 45 days which,
“will be a motion to dismiss, arguing that the allegations in the complaint – even if true – don’t add up to a violation of the securities laws.”
Before September Ripple won’t have to say anything. And if Ripple files a motion to dismiss, another 45 days will be given to the lead plaintiff to file an opposition brief. Then, the court would give 30 more days to Ripple to file a reply so
“the court might not even consider the motion until November.”
When XRP Is Security Or Not?
“I won’t be surprised if there’s a motion to dismiss still pending before the court one year from today,”
says Chervinsky as class actions move at a ‘glacial pace.’
However, in the meantime, both the sides will be gathering evidence such as documents, depositions, and interrogatories. Unless Ripple wins the motion to dismiss, this will go on for a long time.
The settlement won’t be happening at any moment, as usual, it happens after the class certification stage. As for when will we know if XRP is a security or not,
“Probably not in 2019 unless Ripple decides to change course and voluntarily treat XRP as a security (which I sincerely doubt). Class actions are good for many things, but quickly resolving complex securities issues isn’t one of them.”
Chervinsky further explains that SEC has nothing do with this case and their enforcement lawyers are probably following along.
Talking about the plaintiff spending, he says, many law firms take class actions on contingency meaning, no win no fee so they won't be paying anything. As for
“a shady cabal of conspiratorial enemies trying to take down Ripple,”
that comes under third-party litigation funding that is generally a
“calculated investment, not a malicious attack.”