- The U.S. District Court for the Northern District of California consolidated the cases of Bradley Sostack and Bitcoin Manipulation Abatement LLC against Ripple Labs.
- Both proceedings deal with the key question of whether XRP, as a result of its alleged issuance by Ripple, is an unregistered security under US law.
Whether XRP is a security within the meaning of U.S. law is a matter of concern not only for the U.S. Securities and Exchange Commission (SEC) and investors, but also for various courts for several years. It started more than two years ago when Ryan Coffey filed the first lawsuit against Ripple, claiming that XRP is an unregistered security. This claim was dismissed, but numerous other lawsuits emerged afterwards.
Until a few months ago, there was only a class action lawsuit, which has been pending in the state of California since November 2018 and is led by lead plaintiff Bradley Sostack. However, two new lawsuits have been emerged in 2020. In March, the Simmons vs. Ripple Labs Inc. trial began in state of New York, while in May Bitcoin Manipulation Abatement LLC filed a lawsuit against Ripple Labs Inc. also in California.
Partial success for Ripple: Court approves consolidation request
Bitcoin Manipulation Abatement LLC’s complaint, filed just a few weeks ago, prompted Ripple Labs and lead plaintiff in the oldest complaint, Bradley Sostack, to file a joint motion on May 11 to merge the two cases. In the motion, Ripple and Sostack argued that the handling of the two cases before different judges would be inefficient, unduly burdensome and duplicate work. Linking the cases would serve the interests of justice and legal economy.
As can be seen from a document that has now become public, the lawyer and “agent” of Bitcoin Manipulation Abatement LLC, Pavel Pogodin, was contacted before the decision was made and asked to comment. However, Pogodin did not want to make the decision and rather expressed his disinterest in a consolidation:
It will be judge’s decision if the cases are related enough to warrant consolidation. Again, without seeing a single case where it was done, I’m unwilling to stipulate. […]
In view of the fact that your other case is a class action and this case is not, and further in view of the fact that my client intends to opt out of any class action settlement, I see limited procedural advantages in consolidating the two cases for pre-trial proceedings.
Independently of this, Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California granted the motion now, as the merging of the cases would save time and money and avoid conflicting results. The judge stated in her decision that the two lawsuits concern essentially the same property and events and the same parties. The judge also partially discredited Pogodin’s claim and stated
Based on errant typos in its complaint, it appears that plaintiff BMA literally copied, pasted (without formatting), and then deleted numerous footnotes some of the CFAC’s allegations.