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This week, the Ripple Labs legal team removed an ongoing lawsuit regarding the regulatory nature of XRP, the native cryptocurrency of the Ripple block, to the federal court.
Ripple representatives claimed that the collective lawsuit was initiated by a group of investors without geographical limits and, as such, the case should not be managed by a state court.
Peter Morrison, partner of Skadden, Arps, Slate, Meagher and Flom, stressed that since the amount of the dispute exceeds $ 5 million and has been promoted by over 100 members, Ripple Labs can legitimately remove the lawsuit in federal court.
"A & # 39; putative class action may be removed at the appropriate federal district court if (1) the action claims to be a & # 39; class action & # 39; scope on behalf of 100 or more members, (2) each member of a class of plaintiffs is a citizen of a state other than any defendant, and (3) the amount in dispute exceeds $ 5 million. "
Tactical brilliance
According to Jake Chervinsky, a government defense lawyer and a lawyer for disputes over Kobre & Kim stock, the Ripple Labs legal team's move to bankrupt a lawsuit involving XRP in federal court it is "brilliant".
Citing the Law.com report, Chervinsky He said:
"Ripple's legal team shows some tactical brilliance here – it's hard to explain the procedural maneuver in a tweet and I'm not going to do it, but suffice it to say it's a seriously smart attempt to become a federal. , but smooth regardless. "
If the cause for collective action remained in the California state court, Chervinsky declared that he could still cover a national collective legal action. He said that the Ripple Labs legal team needed a way to justify the transfer of collective action from the state court to the federal court.
"State Courts exercise jurisdiction over the residents of other states all the time It is not unusual for a national collective action to be resolved in a state court.In addition, the 1933 Securities Act gives the federal and state courts the competing jurisdiction over private civil claims, "he said, arguing that collective legal actions can be dealt with at the state court level.
I can not speak with their chances of winning since the case is still so young and I do not know all the facts, but it is fair to say that Ripple's lawyers think they are more likely to win in federal court than in state court (or otherwise they would not have tried so hard to remove the case).
– Jake Chervinsky (@jchervinsky) November 9, 2018
Chversinky explained that the Ripple Labs team probably considers the odds to win the highest collective litigation lawsuit in federal court than in the state court, as the team made a significant effort to remove the case.
If the federal court of US rules in favor of Ripple Labs in the lawsuit for collective actions, then it would provide clarity on the regulatory nature of XRP for the first time in the history of the country, and the company could make it clear once and for all that XRP is not considered a title under the laws in force in the United States.
Ripple Labs Legal Team Safe
Morrison claimed that the plaintiffs did not admit that the lack of information about the nature of XRP transactions caused confusion in the investment process and as such, the scope of the lawsuit filed by the plaintiffs is unclear.
"The plaintiffs do not claim that they have no information about the nature of these transactions, but the plaintiffs claim they were hurt in some way because the Defendants would have been required to register XRP as" security "with the [SEC] but he could not do it. "
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