Ripple Labs Manages To Remove Lawsuit Against Charges Of Being A Security

By Rishma Banerjee

Ripple Labs, the parent company of the third largest cryptocurrency in the world, has been the victim of a lot of controversies. Recently a lawsuit had been filed to the federal district court, against the crypto-coin, which alleged XRP to be a security. However, this lawsuit has been removed by Ripple Labs, where the attorney in support of the blockchain firm has rejected the lawsuit by stating that Ripple has not registered as a security.

The plaintiffs had alleged that the firm was involved in manipulating the issuance and distribution of the token, which in spite of having reserved the right of Ripple, was also influencing the market price of the digital assets, in the crypto market.

Peter Morrison, the attorney also added that since an Israeli resident was also involved in the legal scenario of the case, this lawsuit fell under the purview of international matters, as it was a consolidated class action. He used the Class Action Fairness Act and pointed out three important points which were vital in the successful removal of the lawsuit. He said,

“A putative class action may be removed to the appropriate federal district court if (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.”

Whether XRP is a security or not has been a point of contention and dilemma for a long time now, and that is probably owing to the fact that Ripple controls a significant portion of XRP. However, the company has stated that the currency is locked up safely in escrow accounts which only allow 1 billion XRP to be freed every month, in order to facilitate the development of the ecosystem.