A federal judge is green-lighting the much-publicized unregistered-security lawsuit against Ripple.
Bradley Sostack is accusing the company of illegally selling XRP as an unregistered security. Ripple claims XRP is not a security and says the claims are unsubstantiated.
The company filed a motion to dismiss the lawsuit, saying that even if XRP was a security, any lawsuit on the issue would violate the statute of limitations and should have been filed within three years of the 2013 initial offering of XRP.
Sostack’s legal team argues that the statute of limitations is invalidated by the fact that Ripple continues to sell the digital asset.
Now, US District Judge Phyllis J. Hamilton has determined that Ripple “did not make their first bona fide public offering of XRP before August 5, 2016 (three years prior to plaintiff’s filing of his federal securities claims in this action on August 5, 2019),” according to the order.
Says the judge,
“While defendants did acknowledge various 2013 offers and sales in their May 2015 settlement with the USAO, the sales activity identified in that settlement does not show that defendants targeted the general public when offering to sell XRP. Instead, the activity identified in that agreement either shows that defendant attempted or consummated particular transactions with specific third-party individuals or entities,… or generally refers to the existence of defendants’ sales activity without defining the scope of the market for such sales.”
Ripple says the lawsuit could damage the XRP market. The company has argued in the past that classifying XRP as a security could destroy the third-largest cryptocurrency’s entire marketplace.
The company’s legal team has filed a motion to dismiss the lawsuit.