Ripple CEO Brad Garlinghouse and former CEO Chris Larsen have filed twin motions to dismiss the bombshell lawsuit that was brought against them by the U.S. Securities and Exchange Commission in December.
The agency made an unorthodox move to name the two high-profile executives as defendants in its complaint for allegedly aiding and abetting the company’s unregistered sales of the XRP cryptocurrency.
Lawyers for Garlinghouse and Larsen argue that their respective transactions were “predominantly foreign.” Despite claiming that some XRP purchasers were located in the U.S., Garlinghouse’s motion reads that the SEC has failed to plead the details of at least one transaction in the U.S.
Allegations of violating Section 5 should be rejected by the court, according to the defendants, since the plaintiff’s complaint has failed to “plausibly allege” any recklessness to prove that the Ripple executives were knowingly breaking the law by selling the token.
Larsen’s lawyers also state that the SEC is barred from claiming monetary relief by the statute of limitations, a law that restricts the time period within which legal proceedings can be initiated:
Despite investigating Ripple and Mr. Larsen for over two and a half years before filing its initial Complaint, obtaining Mr. Larsen’s XRP trading records, and having every opportunity to identify each offer and sale for which it seeks monetary relief, the SEC fails to allege any discrete XRP offers or sales.
According to an order issued by Judge Analisa Torres of the U.S. District Court for the Southern District of New York, the SEC will have to file its opposing papers to Larsen’s and Garlinghouse’s motions to dismiss by May 14.
The defendants will have a chance to reply to the agency by June 4.