Cryptocurrency exchange and remittance company Ripple has asked a federal judge to dismiss a lawsuit against it on procedural grounds, according to a report by Fortune.
The lawsuit, which alleges that Ripple illegally sold unregistered securities related to the XRP cryptocurrency, could have some repercussions in the crypto world. Specifically, it could change how cryptocurrency is viewed going forward, as it seeks to answer the question of whether digital coins should be viewed as securities or not.
The class-action suit was filed in Oakland by investors who feel they lost money after Ripple prompted them to buy XRP, which is important to Ripple’s business model. The lawsuit is asking for damages and for a judge to declare that XRP is indeed a security.
Ripple is asking for the dismissal not on the grounds that XRP isn’t a security (which it only briefly mentions in its response), but that the case can’t move forward because it wasn’t filed in time. There is a rule that protects companies from unregistered securities lawsuits after three years.
Investors are saying the XRP sale was “ongoing,” but Ripple pointed out that the sale first took place in 2013, which would place it outside the three-year window. Ripple also claimed the investors did not buy XRP directly from the company and noted that California consumer laws don’t override federal securities laws.
Many cryptocurrency companies, including Ripple, have asked for clearer federal rules regarding the regulation of digital currency, but if Ripple wins its case on the more procedural grounds, then a clear definition from the court isn’t likely to happen.
In the U.K. last month, regulators said XRP is not a security.