XRP Securities Class Action: Will We Get To Know If It Falls Under Commodity Or Security?
- In XRP securities class action, oral argument on Ripple's motion to dismiss is scheduled for 9 am PT today
- Ripple CEO, Brad Garlinghouse calls the lawsuit “outrageous,” says XRP has a lot of utility and is a lot different from a security
- CFTC Chairman says it’s “unclear” if XRP is security or commodity
The oral arguments in the Ripple’s XRP lawsuit, which was filed by Bradley Sostack claiming Ripple sold XRP as an unregistered security, are scheduled for today.
In September of last year, Ripple filed a motion to dismiss the suit. But the motion to dismiss like these, Jake Chervinsky, General Counsel at Compound Finance, says in a tweet,
In the XRP securities class action, oral argument on Ripple's motion to dismiss is scheduled for 9 am PT tomorrow.
MTDs like this are usually resolved by written order weeks or months after oral argument. Unless Judge Hamilton tips her hand, we likely won't learn anything new.
— Jake Chervinsky (@jchervinsky) January 14, 2020
And if Ripple keeps up with its strategy of “delay, delay, delay,” it would take a long time for the case to get resolved.
As for whether XRP is a security or not, we won’t be getting to know it because the issue wasn’t raised in the motion, as such won’t come during the oral argument.
It’s “outrageous” – Ripple CEO
The San Francisco-based company claims the allegations have no merit and that Sostack’s claim violates the statute of limitations. Ripple’s motion to dismiss claims if XRP is actually security, then Sostack should have filed his claim within three years of XRP’s initial offering, that occurred in 2013.
But because Ripple continues to sell XRP, the statute of limitations is invalidated, countered Sostack’s legal team.
Ripple CEO Brad Garlinghouse calls this situation “outrageous,” stating,
“Here’s somebody who held XRP for, I think, two weeks’ time and is making some claims. Whether or not XRP is a security is not going to be dictated by one lawsuit.”
“ I think it’s very clear that XRP is not a security….” Brad Garlinghouse pic.twitter.com/nlpbIzjxiN
— Digital Assets Daily (@AssetsDaily) January 12, 2020
He then reiterates that XRP exists independently of Ripple the company and hence isn't a security. Garlinghouse argues that the digital asset would continue to exist even if Ripple shuts down tomorrow, not to mention owning XRP doesn't give anyone the ownership in the company's equity. Garlinghouse told CNBC,
“Ultimately, XRP has a lot of utility, so to me it’s quite different than what a security looks like.”
It’s “unclear” if XRP is Security or Commodity – CFTC Chairman
In a separate event, Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert said it isn’t clear yet whether XRP is a security or a commodity.
“It’s unclear. Stay tuned I’d say,” Tarbert told news outlet Cheddar on Monday, adding,
“Part of the issue is that our jurisdiction we share with the SEC [Securities and Exchange Commission]. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.”
— Cheddar🧀 (@cheddar) January 13, 2020
The chairman said the CFTC is working closely with the SEC over the last year to “think about which falls in what box.”
Tarbert also reiterated his views on Bitcoin and Ether being the commodities and not securities.
“We’ve been very clear on bitcoin: bitcoin is a commodity. We haven’t said anything about ether – until now. It is my view as chairman of the CFTC that ether is a commodity.”