Ripple has been accused of using delaying tactics in order to get a more favorable outcome in their battle to prove that their XRP token should not be considered a security. As part of their motion to dismiss the action brought by a group of disillusioned investors, Ripple makes 12 separate arguments as to why they seven charges laid at its door should be dismissed by the Securities and Exchange Commission (SEC), with many attacking the instigator of the class action suit, Ryan Coffey, rather than defending itself.
Expectation of Profits
Ripple has been involved in the dispute since May 2018 when a group of investors, led by Coffey, who made a loss on XRP tokens between late 2017 and early 2018, filed the lawsuit, claiming in the filing that they believed they were being sold a security that would likely increase in value:
XRP purchasers reasonably expected to derive profits from their ownership of XRP, and Defendants themselves have frequently highlighted this profit motive […] Given its reliance on sales of XRP, it is unsurprising that Ripple Labs aggressively markets XRP to drive demand, increase XRP’s price, and thus its own profits.
Like most coins, XRP certainly didn’t increase in value through 2018, peaking at $3.84 on January 4 before beginning an inexorable slide downwards, ending the year at $0.36. Of course XRP wasn’t the only token to experience this fate in 2018, but the hype around it was clearly strong enough for the law firm involved, Taylor-Copeland, to feel that they have a case against XRP.
“Delay, delay, delay”
Lawyer and crypto enthusiast Jake Chervinsky took to Twitter to break down Ripple’s argument and to try and read between the lines for the benefit of the community. His take on the motion is that Ripple is trying to win on a technicality before the case gets any further, which, he says, will work in their favor either way – victory will see the case thrown out and Ripple vindicated, while defeat will not damage them in any way and will have the added bonus of dragging it out longer, potentially giving them time to divest themselves of more tokens in an effort to prove how decentralized the token is. Chervinsky sums this up in one tweet, saying that “the motion is consistent with Ripple’s long-running litigation strategy of “delay, delay, delay.””.
1/ Ripple just filed a motion to dismiss the XRP securities class action. The motion is perfectly designed to delay the case as long as possible & is deeply unsatisfying for those of us who want a ruling on whether XRP is a security.
Here are the highlights & what comes next:
— Jake Chervinsky (@jchervinsky) September 20, 2019
What Happens Next
With regard to what happens next, the defense must reply to the motion by October 4, Ripple must then respond to this by November 4, and the court will hear oral arguments on January 15, 2020. It will then be another few months before a conclusion is reached by the judges, with the potential for Ripple to appeal if it goes against them, meaning that this case could go on for another year at least from this point, racking up even more legal bills for the defense, who don’t have the luxury of funding their campaign will millions in the bank and billions of tokens to sell if money is needed quickly.
