On Friday, purchasers of Ripple Labs, Inc.’s XRP cryptocurrency token filed a motion for certification of its nationwide and California classes to the Northern District of California in the case of In re Ripple Labs, Inc. Litigation.
According to the motion, each of the proposed class members purchased units or subunits of XRP, a fungible digital asset that is native to Ripple’s blockchain called the XRP Ledger. Further, it states that the defendants, Ripple, its wholly owned subsidiary, XRP II, LLC and its CEO, promoted XRP as an investment that would appreciate with the defendants’ stewardship over XRP since Ripple’s company value was tied almost exclusively to the value of its XRP holdings.
However, as previously covered by Law Street Media, the class action accuses the defendants of issuing and selling Ripple XRP tokens without registering the cryptocurrency as a security with the Securities Exchange Commission (SEC). Further, the notion states that two years after the present lawsuit was filed the SEC filed an action against the defendants that also alleges that the defendants offered and sold unregistered securities.
The plaintiffs complaint alleges that any transactions for XRP violated the Securities Act and the California Corporations Code. Additionally, the plaintiffs argue that the defendants made false and misleading statements regarding XRP to drive up demand and increase profits.
The plaintiffs filed the present motion seeking certification of a Federal Securities Class for the Securities Act claims and a State Securities Class for the California law claims. The motion states that both classes will comprise all people or entities who purchased XRP from May 3, 2017 through the present who retained XRP or sold it for a loss.
The motion argues that the proposed classes satisfy the class certification requirements of both rule 23(A) and 23(B)(3) of the Federal Rules of Civil Procedure. Particularly, the motion argues that the central question of whether XRP is an unregistered security and whether the defendants solicited the purchase of XRP will be the same for each class member. The motion purports that the failure to register the XRP transactions is a classwide violation of the federal and state securities laws.
The court is scheduled to hear arguments for the motion on November 23, 2022. The plaintiffs are represented by Taylor-Copeland Law and Susman Godfrey L.L.P., and the defendants are represented by King & Spalding LLP, Debevoise & Plimpton LLP, Skadden, Arps, Slate, Meagher & Flom LLP, Cooley and Boies Schiller Flexner LLP.