An ongoing lawsuit between Ripple Labs and investors who labeled XRP as a ‘security’ token, has been moved to a Federal Court according to reports by a financial news agency, Unbnked.
The decision to move the case to a Federal Court was made because the plaintiffs against Ripple Labs come from different States. Therefore it is not logical for a ‘single’ State Court to make a ruling.
Another reason is that the lawsuit is now more than $5 million, and as such a federal court ruling is required to resolve the issue permanently.
Meanwhile, the latest move favors Ripple Labs who believe that State judges are more favorably disposed towards plaintiffs and as such could decide for them. On the other hand, the plaintiffs have reportedly applied to have the case moved back to the State Court.
Why Investors Sued Ripple Labs
The class-action lawsuit against Ripple Labs was filed by XRP investors who claim that the token should be registered with the U. S Securities and Exchanges Commission (SEC) as a ‘security’ token.
The plaintiffs claim that the XRP is centralized and the project team holds a large share of the cryptocurrency. According to these investors, the team can influence the movement of prices because of maintaining such a position.
On the other side of the coin, Ripple Laba have argued that the XRP is only a currency like Bitcoin and as such must not be regarded as a ‘security’ token.
Moving the lawsuit to a Federal Court will likely cause a decision to be made quickly to clarify the status of Ripple XRP in the crypto space.