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Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 1 of 9

1 SCOTT+SCOTT ATTORNEYS AT LAW LLP
JOHN T. JASNOCH
2 600 W. Broadway, Suite 3300
San Diego, CA 92101
3 Telephone: 619-233-4565
Facsimile: 619-233-0508
4 jjasnoch@scott-scott.com

5 Attorneys for Plaintiff

6 [Additional counsel on signature block.]

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UNITED STATES DISTRICT COURT
10 NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
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AVNER GREENWALD, individually and on behalf Case No. 18-cv-4790-PJH
12 of all others similarly situated,
CLASS ACTION
13 Plaintiff,
14 vs. PLAINTIFF’S NOTICE OF
RIPPLE LABS INC., et al., MOTION AND MOTION TO
15 REMAND; MEMORANDUM OF
Defendants. POINTS AND AUTHORITIES IN
16 SUPPORT THEREOF
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Date: October 17, 2018
18 Time: 9:00 a.m.
Courtroom: 3
19
Hon. Phyllis J. Hamilton
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28 PLAINTIFF’S NOTICE OF MOTION AND MOTION TO REMAND; MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 2 of 9

1 NOTICE OF MOTION AND MOTION
2 TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD

3 PLEASE TAKE NOTICE that on October 17, 2018 at 9:00 a.m., before the Honorable

4 Phyllis J. Hamilton, United States District Judge, at the United States District Court, Northern

5 District of California, 1301 Clay Street, Courtroom 3, Oakland, California 94612, Avner Greenwald

6 (“Plaintiff”) will move this Court for an order, pursuant to 28 U.S.C. §1447(c), remanding this action

7 to the Superior Court of the State of California, County of San Mateo. This motion is based on this

8 Notice of Motion and Motion, the Memorandum of Points and Authorities in support thereof, the

9 Declaration of John T. Jasnoch and the Proposed Order filed herewith, all pleadings and papers filed

10 herewith, arguments of counsel, and any other matters properly before the Court.

11 CONCISE STATEMENT OF RELIEF SOUGHT BY MOVANT
12 Plaintiff seeks an order remanding this case to the Superior Court of the State of California,

13 County of San Mateo. This case only asserts claims under the Securities Act of 1933 (the

14 “Securities Act” or “1933 Act”) and was improperly removed to this Court by Defendants1 pursuant

15 to the Class Action Fairness Act (“CAFA”), 28 U.S.C. §1453. Because the 1933 Act bars removal

16 of actions alleging only 1933 Act claims and 9th Circuit precedent, Luther v. Countrywide Home

17 Loans Servicing LP, 533 F.3d 1031 (9th Cir. 2008), addresses this precise circumstance and holds

18 that the 1933 Act removal bar prohibits removal under CAFA, this case must be remanded.

19 QUESTIONS PRESENTED
20 1. Does the anti-removal provision in Section 22(a) of the 1933 Act prohibit removal

21 under CAFA of cases asserting only 1933 Act claims?

22 2. Should this case be remanded given that controlling 9th Circuit precedent, Luther v.

23 Countrywide Home Loans Servicing LP, 533 F.3d 1031 (9th Cir. 2008), holds that the anti-removal

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Defendants are Ripple Labs Inc. (“Ripple”), XRP II, LLC (“XRP II”), Bradley Garlinghouse,
26 Christian Larsen, Ron Will, Antoinette O’Gorman, Eric van Miltenburg, Susan Athey, Zoe Cruz,
Ken Kurson, Ben Lawsky, Anja Manuel, and Takashi Okita (collectively, “Defendants”).
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28 PLAINTIFF’S NOTICE OF MOTION AND MOTION TO REMAND; MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 3 of 9

1 provision of the 1933 Act prohibits removal under CAFA of cases asserting only 1933 Act claims,

2 the precise issue to be addressed by the Court in this Motion?

3 MEMORANDUM OF POINTS AND AUTHORITIES
4 I. INTRODUCTION
5 This securities class action was commenced in the Superior Court of the State of California,

6 County of San Mateo, on July 3, 2018, on behalf of all persons or entities who purchased XRP

7 tokens, a virtual currency, from July 3, 2015 through the present. (ECF No. 1-1, Compl., ¶87.) This

8 action asserts only claims brought under §§5, 12(a)(1), and 15 of the Securities Act. On August 8,

9 2018, Defendants removed the action to this Court under CAFA, 28 U.S.C. §1453(b). See Defs’

10 Removal, ¶¶3-4.2 Defendants explicitly do not rely on the general removal statute, 28 U.S.C.

11 §1441(a). Defs’ Removal, ¶25.

12 Removal was improper because, as the U.S. Supreme Court recently confirmed, the 1933 Act
13 explicitly bars removal of actions bringing only 1933 Act claims. 15 U.S.C. §77v(a); Cyan, Inc. v.

14 Beaver County Employees Retirement Fund, 138 S. Ct. 1061 (2018). Moreover, Defendants’

15 position that the 1933 Act’s removal bar should be disregarded when CAFA is invoked is foreclosed

16 by controlling 9th Circuit law. In Luther, the 9th Circuit squarely held that the 1933 Act’s anti-

17 removal bar prohibits removal under CAFA. 533 F.3d at 1034. The 9th Circuit’s holding is directly

18 applicable here and requires the Court to resolve this motion in favor of remand.

19 Accordingly, the Court should grant Plaintiff’s motion in full.

20 II. ARGUMENT
21 A. Controlling Law of this Circuit Requires Remand
22 Directly applicable 9th Circuit authority requires this Court to grant remand. In Luther, the

23 9th Circuit held that section 22(a) of the Securities Act of 1933 provides an “express exception to

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See Notice of Removal of State Court Action (ECF No. 1) (“Defs’ Removal”).
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28 PLAINTIFF’S NOTICE OF MOTION AND MOTION TO REMAND; MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 4 of 9

1 removal” that trumps CAFA, meaning that CAFA does not provide a basis for removal of cases that

2 only assert 1933 Act claims. 533 F.3d at 1034.3

3 Section 22(a) of the 1933 Act (enacted as part of the Private Securities Litigation Reform Act

4 of 1998 (“PSLRA”)) states, “no case arising under this subchapter and brought in any State court of

5 competent jurisdiction shall be removed to any court of the United States.”4 15 U.S.C. §77v(a).

6 CAFA authorizes removal of class actions where: (1) the amount in controversy exceeds

7 $5,000,000; (2) the putative class has more than 100 members; and (3) any member of the class is a

8 citizen of a state different from any defendant. 28 U.S.C. §§1332(d)(2), (d)(2)(A), 5(B), 1453(b).

9 Luther held that “CAFA’s general grant of the right of removal of high-dollar class actions does not

10 trump §22(a)’s specific bar to removal of cases arising under the Securities Act of 1933.” 533 F.3d

11 at 1034. Luther relied on ‘“a basic principle of statutory construction that a statute dealing with a

12 narrow, precise, and specific subject is not submerged by a later enacted statute covering a more

13 generalized spectrum.”’ Id. (citing Radzanower v. Touche Ross & Co., 426 U.S. 148, 153 (1976)).

14 As here, Luther was a case that alleged only 1933 Act claims. Applying Luther, remand is required.

15 This Court is bound by Luther’s interpretation of federal statutes. “Circuit decisions are stare

16 decisis unless they are overruled by the court en banc or come into conflict with a subsequent

17 decision to which it owes obedience, such as a decision by the Supreme Court.” Hurst v. Prudential

18 Sec. Inc., 923 F. Supp. 150, 155 (N.D. Cal. 1995) (citing Spinelli v. Gaughan, 12 F.3d 853, 855 (9th

19 Cir. 1993); Atonio v. Wards Cove Packing Co., Inc., 810 F.2d 1477, 1478-79 (9th Cir. 1987)). “A

20 district judge may not respectfully (or disrespectfully) disagree with his learned colleagues on his

21 own court of appeals who have ruled on a controlling legal issue[.]” Hart v. Massanari, 266 F.3d

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24 In Cyan, the Supreme Court recently confirmed that SLUSA provides no basis for removal of
pure 1933 Act cases. See generally Cyan, 138 S. Ct. 1061. Notably, CAFA was not even raised as a
25 potential source of defeating the removal ban. See id.

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There is an “except clause” to this provision, but it is not applicable here.
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AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 5 of 9

1 1155, 1170 (9th Cir. 2001). Since it was decided 10 years ago, neither the Supreme Court nor the

2 9th Circuit has overruled Luther.5

3 Indeed, during oral argument in a related case that, unlike this case, involved both 1933 Act

4 claims and state law claims, the Court unequivocally stated that Luther requires remand of pure 1933

5 Act cases. In Coffey v. Ripple Labs, Inc., No. 18-cv-03286-PJH, the Court considered the import of

6 Luther on the remand motion of a plaintiff who asserted both state law and 1933 Act claims. 2018

7 WL 3812076, at *1 (N.D. Cal. Aug. 10, 2018).6 Because of the presence of state law claims, Coffey

8 was materially different from the instant case and the Court’s ultimate decision in Coffey, that the

9 presence of state law claims allowed for removal under CAFA is inapt. However, during oral

10 argument, the Court acknowledged that Luther was controlling precedent and that Luther would

11 have required remand had Coffey only asserted 1933 Act claims. Specifically, the Court stated that it

12 “has no authority to overturn Luther” and that, if the case had been brought with only 1933 Act

13 claims, “it wouldn’t present a dilemma for me[;] I’d remand it, obviously.” Coffey Aug. 1, 2018

14 Hr’g Trans., attached to Declaration of John T. Jasnoch (“Jasnoch Decl.”), Ex. A at 13:11-12 and

15 28:17-19, respectively. This sentiment was echoed in the Court’s opinion, which stated, “defendants

16 did not remove this action based on the Securities Act claim satisfying CAFA’s requirements –

17 likely a losing proposition under Luther.” 2018 WL 3812076, at *4. By this motion, Plaintiff asks

18 no more than that the Court draw the “obvious” conclusion and remand pursuant to Luther.

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21 The Supreme Court’s decision in Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.
Ct. 547 (2014), is not “clearly irreconcilable” with Luther. Dart Cherokee addressed ‘“whether a
22 defendant seeking removal to federal court is required to include evidence supporting federal
jurisdiction in the notice removal, or whether alleging the required short and plain statement of the
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grounds for removal [is] enough.”’ Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178, 1183 (9th Cir.
24 2015) (citing Dart Cherokee, 135 S. Ct. at 552-53) This issue is wholly distinct from the issue
decided in Luther. The 9th Circuit has since made clear that Dart Cherokee limited Luther only as
25 related to the presumption against removal – a presumption that generally exists under 9th Circuit
law, but which does not exist for CAFA cases after Dart Cherokee. Id. at 1182-83.
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Coffey has since dismissed his case. (ECF No. 29 in Case No. 18-cv-03286.)
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CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 6 of 9

1 B. Greenwald’s Foreign Citizenship Has No Impact on the Effect of the 1933 Act
Removal Bar
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In an effort to avoid the result clearly compelled by Luther, Defendants put forth a
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nonsensical argument that Greenwald’s “alienage” status somehow impacts this Court’s remand
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analysis and “takes this case outside the purview of Luther.” Defs’ Removal, ¶¶11-15. This fig leaf
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argument cannot conceal the glaring weakness of Defendants’ position or the fact that they ask the
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Court to ignore controlling precedent. Nothing in the cases cited by Defendants provides a basis for
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this Court not to follow Luther and remand.7 To the extent Defendants argue that this case does not
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properly bring claims under the Securities Act because it addresses “international transactions”
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(Defs’ Removal, ¶14), that issue is separate and apart from Greenwald’s citizenship and, most
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importantly, an argument to be made in a motion to dismiss. That argument is not ripe for
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discussion at this jurisdictional stage.
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C. Defendants’ Improper Removal Has Caused Unnecessary Delay and, Unless
13 Promptly Corrected, Will Cause Inefficiency
14 Defendants’ removal has delayed this case from properly proceeding in state court and

15 threatens to undermine judicial economy. This case was filed over two months ago, on July 3, 2018.

16 Two related class actions are pending in the same state court, San Mateo County, and the instant case

17 is ripe for coordination with those cases. See Zakinov v. Ripple Labs, Inc., No. 18CIV02845

18 (Superior Court, San Mateo) (filed June 5, 2018); Oconor v. Ripple Labs, Inc., No. 18CIV03332

19 (Superior Court, San Mateo) (filed June 27, 2018). Indeed, prior to removal, counsel in this case

20 reached out to counsel in Zakinov and Oconor and discussed coordination.

21 Zakinov and Oconor allege state law claims on behalf of a class of California purchasers of

22 XRP during the same class period alleged in the instant complaint, July 3, 2015 through the present.

23 Jasnoch Decl., Exs. B and C. Like the instant case, Zakinov and Oconor allege that XRP should

24 have been registered securities – but under California law, rather than federal law. See, e.g., Ex. C,

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New Jersey Carpenters Vacation Fund v. HarborView Mortg. Loan Trust 2006-4 held that
CAFA overrode the 1933 Act’s anti-removal provision to permit removal of case, unless a CAFA
26 statutory exception applied. 581 F. Supp. 2d 581, 583 (S.D.N.Y. 2008). This is in direct conflict
with Luther and thus is contrary to the law of this Circuit.
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28 PLAINTIFF’S NOTICE OF MOTION AND MOTION TO REMAND; MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 7 of 9

1 ¶¶3-4, 58. Demonstrating the similarity of the issues raised, Zakinov and Oconor point to federal

2 SEC guidance in support of their position. See, e.g., Ex. C, ¶¶65-72; see similarly Compl., ¶¶84-86.

3 Many of the factual allegations in Zakinov and Oconor overlap as they both relate to the creation,

4 sale, and solicitation of XRP. Compare Compl., ¶¶29-77 with Ex. C, ¶¶14-57. Thus, coordination of

5 dispositive motions and discovery makes sense in order to promote judicial economy.

6 Notably, Defendants did not seek to remove Zakinoc and Oconor to this Court. It makes

7 little sense for this case to proceed in federal court while related cases have been consolidated and

8 are proceeding in state court. In the consolidated state case, a Consolidated Complaint is due

9 October 15, 2018. Jasnoch Decl., Ex. D, ¶8. Defendants have until November 29, 2018 to file a

10 demurrer, and a briefing schedule has been put in place for the demurrer. Id.

11 The unnecessary delay caused by Defendants, potential for judicial inefficiency if this case is

12 further delayed, and clarity of the Luther precedent warrant a prompt remand. See similarly Book v.

13 ProNAi Therapeutics, Inc., No. 16-7408, 2017 WL 2533664, at *1 (N.D. Cal. June 12, 2017)

14 (holding that a stay pending the Supreme Court’s consideration of writs of certiorari related to Cyan

15 was not warranted ).

16 III. CONCLUSION
17 Based on the foregoing, Plaintiff respectfully requests that the Court remand this action to the

18 Superior Court of the State of California, County of San Mateo.

19 DATED: September 7, 2018 Respectfully submitted,

20 SCOTT+SCOTT ATTORNEYS AT LAW LLP

21 s/ John T. Jasnoch
22 JOHN T. JASNOCH
600 W. Broadway, Suite 3300
23 San Diego, CA 92101
Telephone: 619-233-4565
24 Facsimile: 619-233-0508
jjasnoch@scott-scott.com
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− and −
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AUTHORITIES IN SUPPORT THEREOF
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 8 of 9

1 Thomas L. Laughlin, IV
Rhiana L. Swartz
2 SCOTT+SCOTT ATTORNEYS AT LAW LLP
The Helmsley Building
3 230 Park Avenue, 17th Floor
4 New York, NY 10169
Telephone: 212-223-6444
5 Facsimile: 212-223-6334

6 Attorneys for Plaintiff Avner Greenwald
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CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15 Filed 09/07/18 Page 9 of 9

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CERTIFICATE OF SERVICE
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I hereby certify that on September 7, 2018, I authorized the electronic filing of the foregoing
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with the Clerk of the Court using the CM/ECF system which will send notification of such filing to
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the email addresses denoted on the attached Electronic Mail Notice List, and I hereby certify that I
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caused to be mailed the foregoing document or paper via the United States Postal Service to the non-
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CM/ECF participants indicated on the attached Manual Notice List.
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s/ John T. Jasnoch
8 JOHN T. JASNOCH
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CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15-1 Filed 09/07/18 Page 1 of 2

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UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
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AVNER GREENWALD, individually and on behalf Case No. 18-cv-4790-PJH
11 of all others similarly situated,
CLASS ACTION
12 Plaintiff,
vs. [PROPOSED] ORDER ON
13 RIPPLE LABS INC., et al., PLAINTIFF’S MOTION TO
REMAND
14 Defendants.
Date: October 17, 2018
15 Time: 9:00 a.m.
Courtroom: 3
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Hon. Phyllis J. Hamilton
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PROPOSED] ORDER ON PLAINTIFF’S MOTION TO REMAND
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15-1 Filed 09/07/18 Page 2 of 2

1 The Court, having considered Plaintiff’s Motion to Remand this case to the Superior Court of

2 the State of California, County of San Mateo (“State Court”) and the authorities and arguments

3 therein, is of the opinion that Plaintiff’s Motion to Remand should be GRANTED.

4 IT IS, THEREFORE, ORDERED that Plaintiff’s Motion to Remand is GRANTED and that

5 the Clerk is directed to take all necessary action to effectuate the remand of the above-referenced

6 matter to the State of California, County of San Mateo.

7 IT IS SO ORDERED.
8 Dated: _____________ ____________________________________
HON. PHYLLIS J. HAMILTON
9 UNITED STATES DISTRICT JUDGE
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PROPOSED] ORDER ON PLAINTIFF’S MOTION TO REMAND
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15-2 Filed 09/07/18 Page 1 of 2

1 SCOTT+SCOTT ATTORNEYS AT LAW LLP
JOHN T. JASNOCH
2 600 W. Broadway, Suite 3300
San Diego, CA 92101
3 Telephone: 619-233-4565
Facsimile: 619-233-0508
4 jjasnoch@scott-scott.com

5 Attorney for Plaintiff

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8
UNITED STATES DISTRICT COURT
9 NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
10
AVNER GREENWALD, individually and on behalf Case No. 18-cv-4790-PJH
11 of all others similarly situated,
CLASS ACTION
12 Plaintiff,
vs. DECLARATION OF JOHN T.
13 RIPPLE LABS INC., et al., JASNOCH IN SUPPORT OF
PLAINTIFF’S MOTION TO
14 Defendants. REMAND
15 Date: October 17, 2018
Time: 9:00 a.m.
16 Courtroom: 3
17 Hon. Phyllis J. Hamilton
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28 DECLARATION OF JOHN T. JASNOCH IN SUPPORT OF
PLAINTIFF’S MOTION TO REMAND
CASE NO. 18-CV-4790-PJH
Case 4:18-cv-04790-PJH Document 15-2 Filed 09/07/18 Page 2 of 2

1 Pursuant to 28 U.S.C. §1746, I, John T. Jasnoch, hereby declare as follows:

2 1. I am an attorney with the law firm of Scott+Scott Attorneys at Law LLP

3 (“Scott+Scott”), counsel for Plaintiff Avner Greenwald. I make this Declaration in support of the

4 motion by Plaintiff to remand this case to the Superior Court of the State of California, County of

5 San Mateo.

6 2. Attached are true and correct copies of the following:

7  Exhibit A: Official Transcript of Oral Argument proceedings in Coffey
v. Ripple Labs, Inc., No. 18-cv-03286-PJH (N.D. Cal.), held
8 on August 1, 2018;

9  Exhibit B: Zakinov v. Ripple Labs, Inc., Complaint, No. 18CIV02845
(Superior Court, San Mateo County) (filed June 5, 2018);
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 Exhibit C: Oconor v. Ripple Labs Inc., Complaint, No. 18CIV03332
11 (Superior Court, San Mateo County) (filed June 27, 2018);

12  Exhibit D: Notice of Entry of Order on August 30, 2018, annexing
Stipulation and Order Consolidating Related Actions and
13 Related Matters, In re Ripple Labs Inc. Litigation, Lead Case
No. 18-CIV-02845 (Superior Court, San Mateo)
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I declare under the penalty of perjury that the foregoing is true and correct. Executed on
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September 7, 2018, at San Diego, California.
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17 Dated: September 7, 2018 s/ John T. Jasnoch
JOHN T. JASNOCH
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PLAINTIFF’S MOTION TO REMAND
CASE NO. 18-CV-4790-PJH
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EXHIBIT A
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 2 of 31

CERTIFIED COPY
UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

Before The Honorable PHYLLIS J. HAMILTON, Judge

RYAN COFFEY, individually ) Plaintiff's Motion to
and on behalf of all others ) Remand
similarly situated, )
)
Plaintiff, )
)
vs. ) NO. C 18-03286 PJH
)
RIPPLE LABS INC., et al., ) Pages 1 - 29
)
Defendants. ) Oakland, California
____________________________) Wednesday, August 1, 2018

REPORTER'S TRANSCRIPT OF PROCEEDINGS

APPEARANCES:

For Plaintiff: Taylor-Copeland Law
501 W. Broadway, Suite 800
San Diego, California 92101
BY: JAMES Q. TAYLOR-COPELAND,
ATTORNEY AT LAW

For Defendants: Skadden, Arps, Slate
Meagher & Flom, LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
BY: PETER B. MORRISON, ATTORNEY AT LAW

Reported By: Raynee H. Mercado, CSR No. 8258

Proceedings reported by electronic/mechanical stenography;
transcript produced by computer-aided transcription.

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 3 of 31 2

1 Wednesday, August 1, 2018 9:03 a.m.

2 P R O C E E D I N G S

3 THE CLERK: Calling civil case 18-03286-PJH, Coffey

4 versus Ripple Labs, Inc., et al.

5 Counsel, please step forward and state your appearances.

6 MR. TAYLOR-COPELAND: Good morning, Your Honor.

7 James Taylor-Copeland on behalf of plaintiff Ryan Coffey.

8 THE COURT: Good morning.

9 MR. MORRISON: Morning, Your Honor. Peter Morrison

10 with Skadden Arps on behalf of defendants.

11 THE COURT: All right. Good morning.

12 MR. MORRISON: Morning.

13 THE COURT: All right. This matter is on for

14 plaintiff's motion to remand the matter.

15 Where are you going?

16 Bring your papers --

17 MR. MORRISON: Just grab my papers, Your Honor.

18 THE COURT: Okay.

19 Okay. So this is on for hearing on plaintiff's motion to

20 remand. Did you wish to make a presentation this morning,

21 Mr. Copeland?

22 MR. TAYLOR-COPELAND: Yes, Your Honor.

23 THE COURT: All right.

24 Let me just tell you what the difficulty I'm having with

25 the case is.

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 4 of 31 3

1 MR. TAYLOR-COPELAND: Sure.

2 THE COURT: All right. You've got both state claims

3 and federal claims. There doesn't appear to be any dispute

4 between you that if your lawsuit had alleged solely claims

5 arising out of the Securities Act, it wouldn't be removable

6 because the anti-removal bar.

7 If your case had alleged claims arising under state

8 court -- under state law, they would be removable. So the

9 question is does the combination of the two -- I mean, I

10 frankly don't know why you even put in the state claims if you

11 wanted to stay in state court because it's absolutely clear,

12 as far as I can see, there is no case, not even Luther that

13 addresses the exact situation we have here where there are

14 what otherwise would be removable state claims.

15 MR. TAYLOR-COPELAND: Sure, Your Honor.

16 THE COURT: All right. So that's the dilemma.

17 MR. TAYLOR-COPELAND: And I understand that. And the

18 reason we included state law claims is because California has

19 a different test for what constitutes a security than the

20 federal. How we test some things that would be securities

21 under federal law would not be securities in California and

22 vice versa.

23 And I think -- I'm in complete agreement with you. The

24 sole question before the court today, given Luther's decision,

25 that the Securities Acts removal bar trumps CAFA is whether

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 5 of 31 4

1 the Securities Acts removal bar --

2 THE COURT: But Luther didn't involve state claims.

3 MR. TAYLOR-COPELAND: That's correct.

4 THE COURT: So it's not entirely clear that that

5 reasoning would apply to this case.

6 MR. TAYLOR-COPELAND: Well, I think the only question

7 before the court is whether the Securities Acts removal bar

8 precludes removal of cases that join Securities Act claims and

9 state law claims. And I think the answer to that is supplied

10 by the language in the removal bar itself, which states that

11 no case arising under the subchapter shall be removed.

12 And if the court needs to look past the plain language of

13 the Securities Act, the limited exception to the Act provides

14 additional evidence that the bar precludes removal of entire

15 cases and not just individual claims.

16 THE COURT: You're talking about 16(d)?

17 MR. TAYLOR-COPELAND: No, I'm talking --

18 THE COURT: 16(c)?

19 MR. TAYLOR-COPELAND: So in SLUSA, as -- as the

20 court -- the Supreme Court noted Cyan, Congress added in this

21 "except as provided in Section 77p(c)," exception to the

22 removal bar.

23 So now the removal bar states, "Except as provided in

24 Section 77p(c) of this title, no case arising under the

25 subchapter shall be removed."

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1 Section 77p(c) in turn --

2 THE COURT: That's 16(c), right? That's what I've

3 been referring to as "16(c)."

4 MR. TAYLOR-COPELAND: It may be -- yes. It may be

5 securities --

6 (Simultaneous colloquy.)

7 THE COURT: I think it is.

8 MR. TAYLOR-COPELAND: -- 16(c) of the Securities Act.

9 THE COURT: Okay.

10 MR. TAYLOR-COPELAND: And then that in turn refers to

11 section 77(b), which would be 16(b), which identifies the

12 covered class actions that may be removed.

13 And now if, as defendants contend, the Securities Act

14 barred only removal of individual claims, there would have

15 been no reason to include this "except" language in -- in

16 amending the removal bar because those claims would have been

17 removable anyway under section 77p(c) or 16(c), which says

18 that the claims identified in section 16(b) are removable.

19 And I think what this further evidences is that when

20 Congress intends for cases arising out of the Securities Act

21 to be removable, it says so explicitly.

22 You know, there would have been a conflict between Section

23 77 -- 77p(c) or 16(c), and the removal bar, but Congress

24 explicitly identified that and allowed for removal because it

25 wanted to allow removal in that case.

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1 THE COURT: Hmm.

2 Okay.

3 All right. You state that position in your papers.

4 Anything else?

5 MR. TAYLOR-COPELAND: Well, I think that, you know,

6 the -- the defendant's analogy to general diversity further

7 reinforces this idea that where Congress wants to allow

8 removal in the face of an anti-removal statute. It does so

9 explicitly.

10 They identify Section 1441(c), which until 1990 addressed

11 where federal courts could exercise jurisdiction where they

12 had diversity mixed with a non-removable claim. And that

13 subject chapter stated that removal was only proper where the

14 non-removable claim was separate and independent from the

15 Securities Act claim.

16 You know, once again, this shows that Congress understands

17 the potential for conflict between diversity jurisdiction and

18 its non-removal -- non-removal statutes and that where it

19 intends to allow removal, it does so explicitly.

20 THE COURT: Hmm. Okay.

21 All right. Response?

22 MR. MORRISON: Thank you, Your Honor.

23 Let me start here. Your honor's exactly correct.

24 Luther --

25 THE COURT: Well, I haven't made any --

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1 (Simultaneous colloquy.)

2 MR. MORRISON: Luther's -- you're exactly correct,

3 that Luther does not cover the situation.

4 THE COURT: Right.

5 MR. MORRISON: What plaintiff is asking for is an

6 expansion of Luther that is unwarranted and not found anywhere

7 in the law.

8 Given that Luther doesn't answer the question, simple

9 statutory construction does answer the question. And I'd like

10 to take a minute to walk the court through simple statutory

11 construction about why the right answer is for this entire

12 case to stay in federal court.

13 In order to analyze an issue that's an open question, you

14 have to start, Your Honor, with the removal statutes

15 themselves. That's the basis for removal jurisdiction.

16 The statute on which we are relying is CAFA removal, 1453.

17 There's no debate that everything in this case satisfies all

18 of the requirements of 1453. There's over a hundred class

19 members, not disputed. Over $5 million in dispute, not

20 disputed. Minimal diversity, not disputed. No exception

21 applies, not disputed. We satisfy CAFA removal under 1453,

22 period, full stop.

23 Now the question is in cases involving both a federal '33

24 Act claim and a state law claim, does the removal bar in 22(a)

25 serve to bar removal of all of it, not just the '33 Act claim.

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1 The answer to that question, Your Honor, is when you compare

2 what Congress did in 1453 with what Congress did in the

3 general removal statute in 1441(a). 1441(a) contains a clause

4 which is extraordinarily significant.

5 THE COURT: Right.

6 MR. MORRISON: That -- that statute, the general

7 removal statute says, "except as otherwise provided by an act

8 of Congress." Okay?

9 Court after court interprets that language to refer to

10 removal bars. The point of that language is you can remove

11 except as otherwise provided by Congress. And what does that

12 mean? It means if Congress over here, like in 22(a), said you

13 can't remove, the general removal statute in 1441(a) is going

14 to defer to the removal bar. That's the language.

15 And, in fact, plaintiff's own case in Nexbank -- this is a

16 case that he cites in his reply at seven -- says exactly that.

17 It says the prohibition of removal under the '33 Act is an

18 exception otherwise provided by law that is contemplated by

19 the general removal statute under 1441(a).

20 So there's no question that "except as otherwise provided

21 by Congress," even based on the case law he cites, refers to

22 removal bars.

23 Now look at 1453. That language "except as otherwise

24 provided by Congress" -- that would otherwise refer deference

25 to removal bars is nowhere to be found 1453. By definition,

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1 Your Honor, that means that the removal bar doesn't apply to

2 CAFA removal by simple statutory construction.

3 We cite in our papers, Your Honor, no fewer than 12

4 cases --

5 THE COURT: And in addition, 1453 has its own

6 specified exceptions.

7 MR. MORRISON: Correct. And I'm going to get that.

8 So not only do we cite 12 cases that support this

9 proposition, including two U.S. Supreme Court cases, Your

10 Honor. And just briefly for the record, the Providence case

11 says -- it observes, "when two statutes included," quote,

12 "'except as otherwise authored by law' language, but that,"

13 quote, "by way of vivid contrast," end quote, "the third did

14 not. The third statute provided for no exception." That's

15 exactly this case.

16 The Russello case, United States Supreme Court, Your

17 Honor, and it's a quote from the case, where Congress includes

18 particular language in one section of a statute but omits it

19 in another section of the same act, it is generally presumed

20 that Congress acts intentionally and purposefully in the

21 disparate inclusion or exclusion of the language.

22 So there's no question that Congress's choice to include

23 the "except as otherwise provided by act of Congress" language

24 in 1441(a) meant deference to removal bars.

25 By not including in it 1453, there's no deference to

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1 removal bars, which means if we satisfy 1453, we stay in

2 federal court.

3 Want to make one more point on that, Your Honor. And then

4 if it's okay, I'd like to respond to a few arguments --

5 THE COURT: There's plenty of time.

6 MR. MORRISON: Thank you.

7 THE COURT: You don't have to rush.

8 MR. MORRISON: Thank you.

9 Let me make one other point on my -- the statutory

10 construction argument.

11 Remember what CAFA did. CAFA did two things. The first

12 thing it did was it expanded diversity jurisdiction, original

13 diversity jurisdiction under 1332. It added subsection D.

14 Okay?

15 If Congress intended for removal bars to apply to the

16 expanded diversity jurisdiction, all it had to do was say,

17 we're going to amend 1332(d), and expand diversity

18 jurisdiction but we're going to leave removal jurisdiction

19 exactly the way it is. And then if you want to remove, you

20 can remove under 1441(a), the general removal statute. The

21 "except as otherwise Congress" language would apply and fit

22 within the expanded diversity jurisdiction, great. But if

23 there's a removal bar, you're out of luck.

24 But that's not what they did. Not only did they expand

25 original diversity jurisdiction. They then added an entirely

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1 new statute for CAFA removal jurisdiction.

2 The only reason to add an additional statute under 1453

3 without the "except as otherwise provided" language would be

4 to expand federal removal jurisdiction. Otherwise 1453 would

5 be completely superfluous. You wouldn't need it.

6 Beyond that, and the point that Your Honor made is,

7 Congress was express about the exceptions to CAFA removal.

8 There's three of them. None of those three show any deference

9 to removal bars.

10 So if Luther doesn't answer the question, in order to

11 analyze the issue, you just go to simple statutory

12 construction. There is no reading of this that would permit

13 the removal bar to apply in this instance to a CAFA removal.

14 Otherwise the "except as otherwise provided by an act of

15 Congress" language would be completely meaningless.

16 THE COURT: Now, of course, Luther, was a CAFA

17 removal, wasn't it?

18 MR. MORRISON: It was. Luther was a CAFA removal,

19 yes.

20 Well, let me address -- let me turn to addressing some of

21 the remarks, and I will cover the Luther case, Your Honor.

22 So it sounds like we're in agreement that Luther dealt

23 with a '33 Act claim and not '33 Act and state law claims.

24 THE COURT: And in fact, in the opinion, it says

25 explicitly on several occasions "this case involves solely

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1 Securities Act claims."

2 MR. MORRISON: In fact, I have the quote here. It

3 says, Section 22(a), the removal bar more precisely applies

4 only to claims under the '33 Act." So on its own terms, it

5 doesn't apply to state law claims.

6 But I'll give you another rationale for why Luther can't

7 be expanded here. The basis of Luther, Your Honor, was that

8 the Securities Act is more narrow and precise than CAFA.

9 Now, reading between the lines, what Luther is saying, the

10 '33 Act applies to securities cases, and CAFA applies across

11 the board.

12 The expansion of Luther that plaintiff seeks here would be

13 to apply the removal bar based on CAFA, to not just '33 Act

14 claims but any other claim brought along with a '33 Act claim.

15 If that were the case, Your Honor, it would completely

16 undermine the rationale of Luther because under that theory, I

17 could bring a '33 Act claim, and I could bring 99 other state

18 law claim (sic) that other would be removable, and then none

19 of them would be removable based on Luther.

20 If that were the case, the removal bar wouldn't be more

21 narrow than CAFA, it would be way more broad. And so this

22 idea that the removal bar is more narrow and CAFA is more

23 broad would be completely out the window. So the expansion of

24 Luther that he seeks is not only contrary to the express

25 language of Luther; it would completely undermine the

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1 rationale underpinning Luther.

2 And, look, Your Honor, given post-Luther developments, far

3 from an expansion of Luther, there are good arguments that

4 Luther should be limited at a minimum, has been abrogated, or

5 should be overturned.

6 Dark Cherokee came out after Luther. The Katz decision in

7 the Seventh Circuit completely undermines the rationale in

8 Luther. And an expansion of Luther in the way that plaintiff

9 asks the court to expand it would completely undermine Luther.

10 Now, let me address couple other points.

11 THE COURT: Of course, this authority -- this court

12 has no authority to overturn Luther. You're simply asking the

13 court not to expand --

14 MR. MORRISON: Correct, Your Honor.

15 We believe that there is a good argument that Luther's

16 been abrogated by Dark Cherokee and that in instance, the

17 court need not follow it as precedent, which I'm happy to

18 discuss and we've laid in our papers.

19 But yes, this court doesn't have the ability to overturn

20 it.

21 THE COURT: The -- My question is whether or not

22 Luther even applies in this situation.

23 MR. MORRISON: We don't think that it does, Your

24 Honor.

25 THE COURT: Because of the hybrid nature --

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1 MR. MORRISON: And --

2 THE COURT: -- or the mixed nature of --

3 MR. MORRISON: And because of the statutory

4 construction argument that I laid out for the court. That

5 statutory construction argument, Your Honor, isn't found

6 anywhere in Luther, and Luther doesn't address the hybrid

7 situation.

8 And as I said, absent controlling precedent on this issue,

9 you have to go to the source, which are the statutes.

10 And the only way to read 1453 and 1441(a) together would

11 be to apply removal bars to the general removal state but not

12 apply removal bars to 1454 under CAFA.

13 Otherwise, the "except as otherwise provided by Congress"

14 language is superfluous, which isn't allowed.

15 Let me address, Your Honor, plaintiff's argument about the

16 language of the removal bar itself. If I can get to my notes.

17 Counsel said that one way to look at this case, Your

18 Honor, would be to look at the language of the removal bar and

19 that the removal bar says "no case arising under this chapter

20 shall be removed" and, therefore, it applies across the board.

21 Well, it's "case arising under this chapter," not just

22 "case," to begin with. But he doesn't cite a single case that

23 interprets the word "case" in the removal bar in that manner.

24 And in fact, we cite a case, the Emrich vs. Touche Ross

25 decision, which is a Ninth Circuit decision, that puts that

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1 argument to bed. Right?

2 So just to lay it out, what he argued, Your Honor was

3 because the removal bar says "case," by definition, it applies

4 to "the case" so long as it includes a '33 Act claim and no

5 matter whatever else it includes. Not only would that

6 rational undermine Luther, but there's -- no case says that.

7 And, in fact, the Ninth Circuit has already found

8 differently. In the -- in the Emrich versus Touche Ross case,

9 Ninth Circuit 1988, plaintiff asserted a RICO claim, state law

10 claims, and a '33 Act claim. And the Ninth Circuit looked at

11 each case individual -- individually.

12 The Ninth Circuit did not say, Well, there's a '33 Act

13 claim; therefore, none of these claims are removable.

14 Actually what happened was it kept the RICO and state law

15 claims in federal court but remanded the '33 Act claim.

16 Now, I'm not arguing for you to sever the claims here,

17 Your Honor. There's no ability to sever the claims because

18 the removal statutes in existence at the time of Emrich

19 permitted that type of severance. Here, those statutes are no

20 longer on the books, and CAFA didn't exist at the time.

21 But what did exist at the time of the Emrich case was the

22 removal bar in 22(a). And interpreting the removal bar in

23 22(a) and the word "case" in the removal bar of 22(a), the

24 Ninth Circuit, controlling authority, Your Honor, looked at

25 each individual claim and didn't just say, "if you have a '33

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1 Act claim, then not a single claim in this case is removable."

2 So that argument -- that statutory language argument he makes

3 has been rejected by the Ninth Circuit.

4 And I need to just make a quick point on the Emrich case,

5 Your Honor, because unfortunately plaintiff miscites it in his

6 reply brief. And so I need to make a record of this. Because

7 we don't have a chance to respond to the reply.

8 In his reply brief when discussing Emrich, the brief says,

9 and I'm quoting, "in fact, examination of defendants own

10 authority reveals that federal courts have consistently

11 remanded cases containing Securities Act claims and related

12 claims that would otherwise be removable, and then he cites

13 Emrich. Emrich doesn't say that at all. Emrich keeps the

14 RICO case in federal court, keeps the state law claims in

15 federal court. So that citation is not correct.

16 And then he doubles down on that, Your Honor, again, on

17 page 6, with a parenthetical to Emrich that says "remanding

18 case containing RICO claim and Securities Act claims," that

19 it's just not accurate and so I want to make sure the court's

20 aware of it.

21 Last and final -- well, there's a couple little things I

22 can respond to. But his third major argument -- so his first

23 argument is Luther.

24 THE COURT: Are you taking the position that there

25 isn't indeed any authority for the remand -- for the remand in

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1 a situation such as this where it's a mixed case?

2 MR. MORRISON: I am not aware of a case that remands

3 in this situation Your Honor. Have I read the entire F.Supp?

4 I can't say that I have so I don't want to make a

5 representation that there is no case. I'm not aware of one.

6 THE COURT: And none was cited --

7 MR. MORRISON: And none were cited --

8 (Simultaneous colloquy.)

9 MR. MORRISON: -- Your Honor, I can tell you this.

10 We scoured the law to see if there's a case, and we couldn't

11 find one. And --

12 MR. TAYLOR-COPELAND: Your Honor, there also are no

13 cases --

14 THE COURT: Hold on. You'll get plenty of time to

15 respond.

16 Okay. It's his turn --

17 MR. MORRISON: Thank you, Your Honor. If I may just

18 grab a little more water.

19 There are cases, however, that go the other way. And we

20 cite them in our -- in our papers, so I can give you a few

21 examples if that's helpful.

22 THE COURT: If they're in your papers, I don't need

23 you to --

24 MR. MORRISON: Okay. Sure.

25 Let me address now the argument that counsel made.

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1 Counsel said CAFA removal is not available because only SLUSA

2 removal is available. And there was a discussion about 16(c)

3 and had Congress wanted to permit removal, they would have

4 amended the removal bar differently.

5 And there's a entire section in both the -- his moving

6 brief and his reply brief that one of the reasons why CAFA

7 removal is not available is because when you have a securities

8 case at play -- a Securities Act claim at play, the only

9 avenue to removal is through the removal bar carve-out in

10 SLUSA and you cannot go the CAFA route. That's wrong as a

11 matter of law.

12 So the discussion that counsel just had with the court --

13 THE COURT: Well --

14 MR. MORRISON: -- about SLUSA removal is

15 inapplicable.

16 THE COURT: An anti-removal bar that applies to one

17 removal statute wouldn't necessarily apply to all removal bar

18 removal statutes.

19 MR. MORRISON: That's my point, Your Honor. And

20 if -- if that's clear, then I don't need to address it.

21 That's -- he -- plaintiff's counsel in his papers believes

22 that because you have a removal bar in the '33 Act, unless you

23 can find a path up through the removal bar on the SLUSA side

24 of things, you can't remove the case, and you have to ignore

25 CAFA and 1453. That's just not accurate. There's not a

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1 single case that stands for that proposition.

2 THE COURT: Well, there are multiple ways to remove a

3 case --

4 MR. MORRISON: Correct.

5 (Simultaneous colloquy.)

6 THE COURT: -- that permit it, and you don't have to

7 meet all of them in order to remove a case.

8 MR. MORRISON: Correct.

9 THE COURT: You just have to meet one of them.

10 MR. MORRISON: That's right.

11 Okay. Fair enough. So I will -- I'll move on from there.

12 Now, I think with that, unless the court has questions --

13 THE COURT: Well, just about the -- the federal

14 claims.

15 MR. MORRISON: Yes, Your Honor.

16 THE COURT: What's your position with regard to

17 the -- I'm having some difficulty understanding exactly -- you

18 agree that the state claims are removable under CAFA.

19 MR. MORRISON: Correct.

20 THE COURT: Correct?

21 MR. MORRISON: Yes.

22 THE COURT: And is your argument that the federal

23 claims are removal (sic) because under original jurisdiction,

24 if one claim is removable, the whole case is removable? Or

25 are you taking the position that supplement jurisdiction

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1 applies? What? What?

2 MR. MORRISON: No. The position is all of the claims

3 are recommendable under CAFA, the '33 Act claim and the state

4 law claims. The removal bar doesn't apply in the CAFA context

5 where you have both removable and non-removable claims because

6 of the statutory construction argument I made.

7 THE COURT: Um-hmm. Okay.

8 MR. MORRISON: Now -- and I'll -- let me say -- let

9 me add this, Your Honor. This case is far better than some of

10 the other Supreme Court cases that have dealt with similar

11 situations. So there was a big debate in the law about what

12 "supplemental jurisdiction" meant for a while, and there

13 were -- there are a number of cases, and we cite them, where

14 you had clearly removable claims and then you had other claims

15 at play that were not removable at all because, say, they

16 didn't meet the monetary threshold for diversity removal, or

17 because there was not complete diversity.

18 I'm thinking of a situation where you could have a federal

19 claim under the '34 Act and a derivative claim, state law,

20 that wouldn't otherwise be removable. And the question was if

21 one is removable and one is not, what do you do?

22 And Congress passed the supplemental jurisdiction statute

23 to say you have to keep cases together. In that instance,

24 Your Honor, you had one case that clearly had original -- one

25 claim, clear original jurisdiction, and another claim with no

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1 jurisdiction.

2 Here, this case is far better. There's no question that

3 the state law claims have jurisdiction. And the federal

4 claims have federal question jurisdiction. Or supplemental

5 jurisdiction, and they certainly have CAFA jurisdiction.

6 So if Congress went out of its way to ensure supplemental

7 jurisdiction over claims that doesn't have any business being

8 in federal court, certainly the '33 Act claims with multiple

9 avenues to get to -- get to federal court should be kept with

10 the clearly independently removable state law claims,

11 particularly because the only way to give effect to that

12 "except as otherwise provided by act of Congress" language in

13 1441(a) Would be not to apply the removal bar where that

14 language does not exist in 1453.

15 THE COURT: Okay.

16 MR. MORRISON: Thank you, Your Honor.

17 THE COURT: All right. Response?

18 MR. TAYLOR-COPELAND: Yes, Your Honor.

19 The statutory construction argument that the defendants

20 just made is exactly the argument that the Ninth Circuit

21 rejected in Luther. It was the argument that was raised in

22 the district court and then again on appeal and rejected by

23 the Ninth Circuit.

24 And then going on to the -- the wording of Luther,

25 defendants have cherry-picked certain instances in which

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1 Luther refers to claims, but there's also a number of

2 instances in which the Luther case refers to the Securities

3 Act precluding removal of entire cases.

4 In fact, Luther states, Section 22(a), quote, strictly

5 forbids removal of cases brought in state court and asserting

6 claims under the Act.

7 Plaintiff's position is that CAFA doesn't allow removal of

8 individual claims. By its own wording, CAFA allows removal of

9 other entire class actions or not. And the Ninth Circuit

10 recognized that there's a conflict between CAFA and the

11 Securities Acts removal bar. And the Ninth Circuit determined

12 that the Securities Acts removal bar trumps CAFA, and despite

13 what defendants are saying --

14 THE COURT: Do you --

15 MR. TAYLOR-COPELAND: -- decision is controlling.

16 THE COURT: Do you think that it makes a difference,

17 though, that the Luther cases didn't include state claims as

18 your case does?

19 MR. TAYLOR-COPELAND: I don't think it does.

20 THE COURT: Why not?

21 MR. TAYLOR-COPELAND: I think -- well, because the

22 Securities Act removal bar precludes removal of cases.

23 THE COURT: Any case that has a Securities Act claim,

24 even if there are a hundred state claims?

25 MR. TAYLOR-COPELAND: Well, Your Honor, I think, one,

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1 this isn't a case in which there are a hundred state claims.

2 This is a case in which there are state securities claims that

3 are closely tied to the Securities Act claim.

4 There's no allegation in this case that the Securities Act

5 claim was somehow brought just as a way to -- to use the

6 removal bar. So -- but yes, I would say that it does,

7 especially when those state law claims are related to the

8 Securities Act claim.

9 And, in fact, the state securities claims can in some way

10 be said to arise directly out of the Securities Act itself.

11 California's Corporation Code was enacted following up on the

12 Securities Act. And particularly its registration provisions

13 borrow heavily from the Securities Act.

14 THE COURT: Um-hmm. Okay.

15 MR. TAYLOR-COPELAND: And then if -- if we could

16 circle back to this Emrich v. Touche case in the Ninth

17 Circuit, defendants are somehow suggesting that the court

18 there decided that the case language doesn't mean entire

19 cases.

20 What they're neglecting to inform the court is that the

21 court there was dealing with a statute which went through when

22 individual claims were removable when paired with other

23 individual claims.

24 So this is, I think, 1441(a) after 1441(c) was -- was

25 changed. But you -- that sort of is the language where cases

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1 were allowed to be removed only when they were separate and

2 independent from the non-removable claim.

3 And, you know, if -- if defendants want to perform an

4 analysis of whether this case is separate and -- the state law

5 claims are separate and independent, I think certainly they're

6 not in this case. They -- they all arise out of the same

7 wrong, and that's defendant' sale of unregistered XRP

8 securities.

9 THE COURT: Um-hmm. Okay.

10 (Pause in the proceedings.)

11 MR. TAYLOR-COPELAND: That's all I have, Your Honor.

12 THE COURT: Okay.

13 MR. MORRISON: May I make one quick point, Your

14 Honor?

15 THE COURT: Sure.

16 MR. MORRISON: I'll be brief.

17 THE COURT: There's no rush.

18 MR. MORRISON: Okay. Thank you, Your Honor.

19 Let's say that this is a close case, and the court is

20 struggling with exactly what to do here. There --

21 THE COURT: It is and it is.

22 MR. MORRISON: Sounds it.

23 And so I wanted to try to be helpful. There are

24 tie-breakers in the law in this context, Your Honor. Dark

25 Cherokee and the Supreme Court has said that when you apply

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 26 of 31 25

1 CAFA, you apply it broadly and that there is no presumption

2 against removal.

3 If anything, there is a presumption in favor of removal

4 because the entire policy behind CAFA is to have large,

5 important, nationwide class actions stay in federal court.

6 That's exactly what this is, Your Honor. It's over --

7 allegedly over $300 million at issue. It's a nationwide class

8 action and is an issue of first impression about --

9 THE COURT: Actually, it could be an international

10 class action.

11 MR. MORRISON: That's correct. And it's -- it's --

12 issue of first impression about how virtual currency should be

13 regulated. That's number one.

14 So CAFA alone and the Supreme Court tells the court how to

15 break ties. That's number one.

16 Number two is burden. Once we show that we've satisfied

17 removal jurisdiction under CAFA -- and Luther says this --

18 we've borne our burden to be in federal court. We've done

19 that. There's no question we satisfy the requirements of

20 CAFA. Once we do that, plaintiff bears the burden to show

21 that an exception or the removal bar applies.

22 So given that all ties under CAFA get broken in favor of

23 federal court and given that he bears the burden of showing

24 why that shouldn't be the case, if it's a close case in Your

25 Honor's mind, you have to keep this case in federal court,

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 27 of 31 26

1 Your Honor.

2 Thank you.

3 MR. TAYLOR-COPELAND: Could I briefly respond to

4 that?

5 THE COURT: Sure.

6 MR. TAYLOR-COPELAND: Yeah, the -- the purpose of

7 CAFA was to keep certain high-dollar class actions in federal

8 court. But the purpose of the Securities Acts removal bar is

9 to give plaintiffs their choice of forum and venue in

10 securities cases.

11 Removal bars are very rare. Congress included that

12 removal bar in the Securities Act in 1933. Congress amended

13 the Securities Act with a view towards securities class

14 actions in 1995 and 1999. And it even carved out certain

15 language about when securities class actions could be removed

16 to federal court.

17 None of those amendments allowed for removal of securities

18 cases. So our position is that the Securities Acts removal

19 bar, and this is what the Ninth Circuit says in Luther, is the

20 more specific and focused statute.

21 Viewed in the context of the PSLRA and SLUSA amendments,

22 it focuses specifically only when removal of Securities Act or

23 securities class actions is permissible.

24 And then to address the argument regarding Dark Cherokee,

25 the Dark Cherokee court considered the single question, and

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 28 of 31 27

1 that was to assert the amount in controversy adequately pled

2 in the removal notice, does it suffice to allege the requisite

3 amount plausibly or must the defendant incorporate into the

4 notice of removal evidence supporting the allegation?

5 The Supreme Court decided that that answer was supplied by

6 the statute itself, and then notes in passing that no

7 presumption against removal attaches to CAFA.

8 The Supreme Court wasn't addressing a situation like this,

9 like the one addressed by Luther where a (sic) anti-removal

10 statute conflicts with CAFA and diversity jurisdiction.

11 THE COURT: Okay.

12 MR. TAYLOR-COPELAND: So --

13 THE COURT: Are you taking the position that even if

14 the state claims were dismissed, that the case would still be

15 removable?

16 MR. MORRISON: Yes, Your Honor, because courts

17 adjudicate removal under the law as the complaint exists at

18 the time of removal. So even if we were to stay in federal

19 court and the state claims would be dismissed because of the

20 time of removal they were there, it stays in federal court.

21 THE COURT: Okay. But otherwise, you would agree

22 that the anti-removal bar would apply --

23 MR. MORRISON: If --

24 THE COURT: -- if they had been dismissed in state

25 court.

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 29 of 31 28

1 MR. MORRISON: If -- Take a hypothetical where

2 counsel only had brought '33 Act claims, then you would be in

3 a situation where Luther may be more applicable here. We

4 believe, Your Honor, that there is a good argument for removal

5 even if that situation given Dark Cherokee, given Katz --

6 THE COURT: Sure. But that's not --

7 (Simultaneous colloquy.)

8 THE COURT: That's not a strong --

9 (Simultaneous colloquy.)

10 THE COURT: -- a strong argument.

11 MR. MORRISON: I think the existence of the state law

12 claims make this very different from Luther, but I don't want

13 to say to you that we wouldn't remove even if this were

14 different because we think that should the Ninth Circuit get a

15 chance, they're going to revisit Luther and come out

16 differently.

17 THE COURT: Okay. All right. Well, it wouldn't

18 present a dilemma for me. I would -- I'd remand it,

19 obviously. Yeah.

20 But in any event, I think this is a difficult question,

21 and I think it's sort of a complicated question. And if I

22 were to deny the motion to remand and keep the case here, I

23 would be inclined to certify the question to the Ninth Circuit

24 on the remand because I'd hate to adjudicate a case that is

25 likely to be as complicated as this case could be if, in fact,

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 30 of 31 29

1 it really does belong in state court.

2 What do you think about that?

3 Is that a question you would -- if you were to lose your

4 motion today, is that something that you would like to pursue,

5 an interlocutory appeal, if the Ninth Circuit were willing to

6 hear it.

7 MR. TAYLOR-COPELAND: It's certainly something that

8 we would consider if we lost this motion today, yes.

9 THE COURT: Okay.

10 All right. Well, I'm still thinking about it.

11 Anything else?

12 MR. MORRISON: Not from me, Your Honor.

13 MR. TAYLOR-COPELAND: No.

14 THE COURT: All right. Matter stands submitted.

15 Thank you.

16 MR. TAYLOR-COPELAND: Thank you.

17 MR. MORRISON: Thank you very much, Your Honor.

18 (Proceedings were concluded at 9:39 A.M.)

19 --o0o--

20

21

22

23

24

25

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-3 Filed 09/07/18 Page 31 of 31

1

2 CERTIFICATE OF REPORTER

3

4 I certify that the foregoing is a correct transcript

5 from the record of proceedings in the above-entitled matter.

6 I further certify that I am neither counsel for, related to,

7 nor employed by any of the parties to the action in which this

8 hearing was taken, and further that I am not financially nor

9 otherwise interested in the outcome of the action.

10

11 ___________________________________

12 Raynee H. Mercado, CSR, RMR, CRR, FCRR, CCRR

13 Sunday, August 12, 2018

14

15

16

17

18

19

20

21

22

23

24

25

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR (510) 451-7530
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 1 of 16

 

 

 

EXHIBIT B
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 2 of 16

1' ROBBINS ARROYO LLP FILED
.. BRIAN J. ROBBINS (190264) SAN MATEO COUNTY
2. StEPHEN J. ODDO (174828)
. : ERIC:M. CARRINO (310765)
3:, 6()0 B:Street, Suite 1900
'. San Diego, CA 92101
4. Jelephone: (619) 525-3990
+ ,facsjil:iile: (619) 525-3991
$, r:..:m.~il: brobbins@robbinsarroyo.com
' ; • ::~::· soddo@robbinsarroyo.com
6' ;
1
'di::
ecarrino@robbinsarroyo.com
7 ;Att?:Teys for Plaintiff
8 '[Ad~~tional Counsel on Signature Page]
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA

;;;,:r 10. ·:-··_·:_;·.~~ COUNTY OF SAN MATEO

\.{~bi ZAKINOV, Individually and on
;:;,; 11
·!!:: 12 . :~~~~f of All Others Similarly Situated, J:<~~j·~;o_);\ ._1:~~. C I V0 2 8 4 I
':) (CI:ASS!A01'!0N'J:.,;:
..">'""::'•:t·:·.•••:'·"'
~;~~;, :·!·';l:iill!;·~
) ,c-. :•:::.' .
13 Plaintiff, ) COMPLAJ;NT..FOR VIOLATIONS OF
v.. ,, ) CALIFORNIA CORPORATIONS CODE
::H'1 Lr j!! :n·?;:: ) .:... '

:;) . ' iRI~~LE LABS INC., )
!!~:.~}~. ;XRP,,:ll, LLC, )
::•:::::::·.: ;BRADLEY GARLINGHOUSE and )
:;.~ ., 16- :po~s 1-25, Inclusive, '
)) •:::;:::,,:,' . :•:,' .•:::: i'~\: ;;:~::y::;:::~:p:::•:;::;' :. ,•.
,. . ,... ... '-·' .... '

) , :DEMAND FORJURYTRIAL ', S
~~~~~~~~~~...:._;,.;.:;-:......:.::.:...-:':-::'-~~-J;; ·:.;:':;. ·:·: .:,:-•<::''Y: .. :-;::::::; ::: :.::-;::c · -<·

(1a-CIV-02845
I CMP
: Complaint

' ~\miDI~\ I \I\ I\I \I \I\ \I IIIIll

,, '~ ' ,,
. "' " .. , - •' '" " .. , '
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 3 of 16

. '"

~:: : " "'

,.. '

1 ~- '< ·iNTRODUCTiON'
" 1: ,:;;·;::;;
''-2: 1. Plaintiff, individually and · on:·behalf Of all others similarly situated, by gis
' '"' ····--
;i-"::;:g_ ~~e,~~igned attorneys, alleges the following based upon personal knowledge as to plaintiff an,d
<.:'';; 4 · 'piilln~iffs own acts, and upon information and belief as to all other matters based on ~e
.. :. :::: ~::- .' :~ '

5 _iny9stigation conducted by and through plaintiffs attorneys, which included, among other things,,
"

,, :'> 6'- :<1 '~:f,#yiew of media and reports about the Company and Campany press releases agai:P-St .

'db~~~dants Ripple Labs Inc. ("Ripple" or the "Company"), its wholly owned subsidiary XRi~II,
:- - :_ j_.
,:'i ~d~¢:;<"XRP II"), and Ripple's Chief Executive Officer, Bradley Garlinghouse ("Garlinghous6"):
9. ,;~~~#tiff believes that substantial additional evidentiary support will exist for the allegations ,set '.

·forth herein.
-,, 11 ;_;'·i.H[;' .,stJM:MARv·olf:f'ftt:A:ctto:No -" -.,
~lass ~:tiC>~ -~n ~~~:ii o~:~li.C~ifornia citizens who purchased
'
:.. ;:- 12 { · }Jrm· 2. Plaintiff brings this
~~

':
13 .~i'~"erwise acquired Ripple tokj~,;~;~::j'ii~~~J 'J;;~i:i1d ~~ defendants. •

14 : . ;;;:;1\ 3. 'Ill :
(
XRP, despite its name as a "token," is actually a security under California law.
' . >: ·<:::•; .
15 p~~¢:ular: (i) Ripple uses the funds it raised from the sale of XR? to fund its business ventur~s;·
{~ , ,~~i).~Th~; Company indiscriminately offers XRP for sale to the public at large; (iii) plaintiff and ~e- :
'i
,,~: ,,
l "

,'
"
: ~ ' :' ' . .. ~ ~. ~

" 17 .Cl~((as defined herein) are effectively powerless to control the success of Ripple and XRP; and.:
" 1:~ (i~) .pl~intiff and the Class members' investment is substantially at risk and is without any'
. .: , : ~~ .. ;. '
·~~· ' . ~. -·~ ),~:~i
'
,19: :seco/it~~-
'

:
..
"
2(f : :: ~m::: 4. As a result, defendants were required to register XRP when offering or selling it. '

21: Jhe(~id not. Instead, they made a series of improper statemcn:s which drove up the price ~f :·
"~ '"

22 ~RP;::allowing defendants to obtain greater returns on their XRP sales .
23 .:! <
.j!!.':~~SDI~.!~~-~,~~-~-:yENUK
""

24-. This Court ha!?j frrisdiction ·over' the- c~uses of adion asserted herein pursuant tb.

25 the S.aiifornia Constitution, Article VI, section 10, because this case is a cause not given by

26· .statute :to other trial courts.
2.7·:
28.

. ',"', ""'.::·.·. :, . 1..;.; ',- .
·' CLASS ACTION COMPLAINT"
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 4 of 16

'.
··: '.'·: .. :. . ...
1 6 Th~:.vi_q,l~tion!!. Q( l:iw.coroplhlrt~<f. of.her~in pc~l,JP"ed,in:,C.ali.fQmia,':and·:.in);ITg¢
2·p~ inthl~;c9~t~~::·~~r~;,~~~~i~:~H~e de~~~:~~ts·r~~id~:~;:'~~~~t~~ coJ~~. . ., ,·.
3 . . .'x?.::· ...-,... ·:fB~s;bnirf:;h~~~ ~~~~~h~:-~ilii~dicfi~'Ii ;~v~~·· ~a~h-.-~tili~,l~~tg~d~~~~:i~med· h~?~~p :: .
4:: b~~iiuse th~y ~Ql1~~~t bu~in~~~, . 'Yer~ .citii~ns. 9t ()r, t~~~ step~_ici. ~on4:u9t t~!! .i~i~~~(coi11. ()ff~ring
.. ·s (;'ICO,~')~~:;t~ti~~~~~;:: "...... ''·"·'·"" ..., .... ,., ......,,,_, ............,,.;:,·::· ... . ..... ··:·,;. . '.·.
, ...... " "' " ' ' . :~ ~-.;·~. '" ~~·.-::::. .
6.. . .
, , ,. ' ''"" '""''

s·::_ .. ,Y:~y~e'i,~~;::~·0f¥:~~::;~~~~~,~~,',~~,, de~~~*~~f!:: 0?~~tt~:.;t~~~S,i:i~f,6~~-~;~~·:,#~ ::fj~n~te:d,
1.: from;"at .~~'ast" ir't ·I)ID1;;.il1is.'coti~i)<' . tlie ·:;Y,ipiil:t~9ii~''br 'itiw. coinpii:dri~(fof:; ~~nmt6ccJITe(.fh1 ~his.
:.: ~.:. ~:. ::~~ ~~ •",;' " :"~::~::· ' '

.,~: ,G~unty~ :f?~her,:~~~a~~::?{)~,~:~:1~~~~'~t~·iiy~)e,S:~:~?,Th~:~-?;~-~~~~~~,s:~ in, 1i11~:,f.<>~~;,:[, _u . 'i. "·:; ..
'·9: · . . 9:· Thii~~~-,~1~-~· h'~~;(B~~s~~~,lj~~is<i~~~~ri,g,:?~~ip~~n1~t:s,j,~¢~~~-~~:~~~~y:~~*i,~e 9r
1,0.: have

their·principal:p1aces·ofbusiness:1n
·.··
:cafifornia
'i I . . THE PARTIES . ....
12· Plaintiff
"
,,
.
~(#iihiifiv!aa_i. z.'*11?-<>X)~,,f:: ,cit~~~IJ ,J>.f f(ltifdrwa.,; .. :PI?i?;t~((:·purf~a~~ci'iXf4> ih ·
:::T .. ~;:::~:~~:~~ -::~:::: . ·~

~anli~_'2?~.~-,~~~~~~:.4:~~E~~;~~rt~~Y·
Def~~,d~~t~ ;
16; {i. Defeilctarif'Ri' ··'re':H;::~'
.·. , .... ·.·.... pp::),, .. ,,,,,co ·"otatiori
..·rp_ .... ·.... :'.'<"With '·i'rinci · ~f exec.u'ti:V~''orficefioc·ate~r'~f
.. :::R,· .. p _, -:: ·,'·,....... . .... ::,:':'.' 31:5.
'· ·:
17 M:di;itgomery~ stil~er;1'2ri<f FJqor~ ~siili:.fran(;is(;o, ,.c_;Jirdciia; :'·Rippi~:,oper~t~s 'RippleN~f; ~'~iob~r :.
18 pa;me~t~:-n~~or~ -:lJ.ase~--~n~~:~ip~kcha~~- t~cfu10:l~gy. t~oug~f:ii~pp~e~'~1?.: ba~:~::~d: ~a~ent .
,·,
<:! ~- ~- J ·>LF :·~·--- ··:. "---~~::>J~ -~:::·.: .;. __ ::: __
1.9 proviqe~s ·c.~ _u~~:~~~- digiilif'as,seFXRP. to··p~~-~~~s~':~~~-;~--~~~~·fg~; ~~~~ia~,~~~F~i,~~,~-'ij:~~al-
20 time ~9ficiwi~e. · ·· .
1~.: . -; b~f,~~?~rxru> rr~~:·~J~~~:d ifabil~ttcomp:~r~:~~;~:'wh~~~fo~ed subs~~i~! ·., ,,
·22 · of Ripple.·: Its pri~bi·p·~I'place of.b~~iness:'i~ in san:·Ftancisd~;::c_arifh~ia. XR£ rl'sold.XRP arid,·:, ··'

23 SoliCited the purch¥e~ of,:)(~ -~m PI~~IlH;,~tJie SI~s for i~ ~,;b~e~~~~ ~:i~~fit :~: '
24 its' parent, R.ipple;·_ang1ts:¢?Cecufly~~;·an.Ci'o}Vllers~ ~ii,chas defeiiti~'~J!nghouse ·:: i: ...
25 . lj. ~fOnd.;;; ~ililingliOUse ~··~upp\e;tb~f~~ ExeCutiVe ~Cer ar:~'J,eeil since, , ..

26 J ailuary 20 I?::.a~~t;~}i~:e~t~r :htid h~r~e~J'si~~~·:tit:~~asd~y: 20f'7 ';P~f6~~~~,t:Gikii~gh.(),U~e was;' ·
also Ripple;i
.
~
.·Pre~ideht
. . .
ab:ct CJ-ti~{ Operating:
' " ' . .: '
O:ffic~r
. .. . .
fr6m Ap~i( 20.15
. ... .
: "'
to~::i5~c~fuber::;·2oi6.i·. ·
.. ,, ...
'. '·' ' ," " "~' ' " ' .,_, " "" "' " ' . '' : '

28' 'tiefendant Garlinghouse is a California citizen and a resi~ent of Sc.n M:ate~'Bbunty.
- 2~ .·
.. CLASS ACTION COMPLAINT ..
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 5 of 16

,,
j

1 .. TheJn.te.,~w:m~s. ~d.9apacities ,of,d,efend,apts su~d-_hereii\:\lPQer.:C~lifo:r:nia.C~de of~;
14.
2' ;:C'ivii Prqc_e~u~~::~~b;}~~:414:·~~::~~es-'(~hro~~:·;~·,::in~fu~i~e, are p~~t~~~~~,~~~:i&own to ~t~lntitf, :
3 :wh6. therefbre su~FtA~~~A~fe~~:cints· bY:: sud~::tctiiioi~';riames.·:: ~~ibtifk~~~u\~~6~~,~~·~~~hd thi,~: .:
4...'bomplai'nt ?!ld inc~ud~_·:;ill~s_e . 1?9~ _4efend~~s~. tn~;~.-~ame~.
CC1pa,cihe~ ...~het:l.Jl1ex ar~' ,~· ffi?.':l.
......s: :asce~ainect:::i:E¢!h::~t~~~g~:~c:~Iii8J~t9·~,~'~ ·d~:f~~~~n~~-::i~:::fC,~f~~:l\;ig:;;ffi:!:~6~~;;~~~~~;}~'r JU: ·1 ... .

6. 'conducr'a,tl~ged -h~t~i~.M4.for tlw:Ih]Jfies\~~t:feted_.b}:;dl:e Cl~~s~ ..
~: _, " . ."'"' \l;· ,. '"" .~~ ~~~::::;~:·~"" -~~~
7 RIP;t>L.~_INDISCRIMINATELY OFFE~~XRP TOT~ .rUB~J~
AT. LARGE ·WHICHP.LAINTIFF'ANll THE CLASS 'INVit'sl'ED
8 .... _.,,_:, iN:WITH AN EXPECTATION" OF PROFit,....;-":'::::::,::::
. .-L. r .. : :· .. .. ... .. .:::·) :::: ~~--:.: ·.. ~::/ : ... .
,: .....
'''

'·'< '
;\ :;

10: · 1;s. Ripp~~. s~l,ls XRP thro,ugh ex~p~g~~ and directly to inves~or,s::/l]l~,.Cpmp~y list~
:
11 the vario~::~_exc~~~~t:::~~--~4ikP. irivesior{6#f:,purch~~ej~~ p!l_::itf;~el?,;~~~l)_'~~-~:~J~--;~o~~ ::
)2. pr(jvi<les:st~p by.st~P:~w-2h~~:i~i~~~~-cti6hs. . . . . . . .. . - . . .. '. :;
· ·""· tHF;~:~::;~· :·:~~:::· ·--.:::·::~:::"· ... -- ., ... : ·:-- .... , . .-~~:+ ·.::·.~:~::!.: . ·. .:~ "; ;t

13; . i6. Pl~~iitiff a~d: t~~.:¢ias~,:Ifl.y~~t~~:-fi:at::ap~_,?.ther'{ijg:1~~~~~~n~1~s;r§~(¥~,~1tcoiri :

i4- WiCi E~ei'e~~(r<>::~~~tc,h:~~~i~ili'. ... .: .... ... :·
~t IT ~f~~n~If :Ms~d:~~~~rr,~~::~\~:~~f~~'~'~<x~,·:::::~2 :$m~t:~lfi~r'::n:1williti~_nW~ffi~~:~:f~- 1~2 ·1
~6 XRP.:at $1}}3.7 arid:'?.7:;Q:~ at.$J_,3~?p,n Jruwary. .ll, 20!],: an4f2?~~:fr~}IJ::~_;pri,~~:of;~J:992~ :
1:7 · on Jcinrnrr.i;27,::;,Ql:~;;i_gi~f~~(~i,:§~~;~~~-~~-I(f'arir_rif'hf~·X:~:· . . ,. . ,,~-. '· ' ""'"'"'·"'"·"'"" _., ._ , ,_,_., .·.· :/· :
18: P.Iruntif/an~~;ib~/~~~~(i~vest~cl
18.
:::
.: " -:::::- .... .'''·'''' ','' '"
in x~: :~th":tlik':ex ectation tha{xR'P<would
'' :.· ... ,.,_. ' , ,, "' :·:· .._,::;=: p " ""·'. ' '"
;:
19. incrt(ase
.
:ih 'vald~'anti'~~~bli:in.a;~i~±it:<x~expi~irt~~f.b~l~-~~':d&t~~d~t§·:h~Ve
·. . . . :."
--.~~ ·--~:~
proiliSi~d'xRP and;·.:
'' .~;~:

> 20' ·confl~ted t4e _valu~ of xRP:q'ili its. ofuer so:th~~re effbrts. . .'
. ~-~-~·:::.··:·· ~~>· .·;~~~::_~~----~~.·;:E·~: :;~;;-~::~·~:·:.. -- ~::>··~::;:·::·.:·. ... . ..
~I RIPP.LE USE·s PLAINTIFF ANifTHE CLASS MEMBERS'' ·uNSECURED PASSiVE::" .i
22 ,! ·· L:.:: :~;::<.I~:.ESTME~T-~ !~:~!J.l\lD':J:H~ COMMON:.EN~~~~SE:,::' '" '·'' :!;~-~ .. •:
23.. lt
Ripple" CQI1Cedt;:s,. that it "s~~ls XRP to fund its ope~~tion:):;:~~~:;·~~ornot~ ~e· -:
24 · n¢i~ork. ··This :~llo.w:~. Ripp,le [] to have aspectacularly:*illed: te~- to. dev_elop[la:rid pr,mppte th~ :
2's ~~pie p~otocoi, ~~:~emrori~:ll ·fu~ple ~ol~ neaa; $92 ·milli~n:worth ;~~;;~l~~i~e fou~·;~~art~r. ~
26 : of 2017 aiorie~: ·Ortihf~hi:{~tion and':belief; the saJe' ofXRP ·subkt~~t1hl:dWfu:ti ·anyoih~f ~~~ce -~f }
.,.· . ' ·:: .. . .. ~;· : (:;~:

27 revenl1e fo~ the S~IP_I?at,IY· ··
< : ~-

-'3'>'. ''. '
.. CLASS ACTION COMPCAlNT ··~ ·
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 6 of 16
u

1 :: 20. I~,. aqqition;.-plaintiff
and the_ Class :meP1bers~· -~:Jvestn!ei.Itds.-:t?:nt~~ely '.P~ssive.
·2 Plamtif~·::aq~·,;-~~~::;'~l~s~., -~~v~;; no ab,il_ity·,. t?., _cont;()r:::t~~--:~-~r~-~io~,,Y}·::ih~_,:;S~;~~~''•6i .th6 _
3 d~velopn'ieiit'<~f th~}XJ~.P,: L~dger.(de~~ri6eih1',fuor~ cl~t~il:·&elow)Y:i~kath~f;jt,,i~::ihrotigh tli~;

: :::~~h1~ir:~:;::~=~ti;:~~~~~~~i;;:;~ji~~~=;
6 they}iav~ ri~ar'<:9tri.Piete §o~troJ;,_1S,,.expl~n~c(b~)qW.
7 -· 2~. ~;i~intiif::~~ fu~':Class.:member~;':~vestment:in<x_:uqs'unsecurect an(Fafi-lsk of
8. .io.ss•,;~t ·. ~ll:,:times~;:,l~gely.'d~J~~~i~g :, o~ ,:de~~hdimts': .~~tio~~;:•';!~'t~::d~;~rld~~~:_:jaii::·~k: create ~

~:. ~::~;~~:~~,:::::~:.:~r·::";;lmd:~tr.l~:~~~~~~~:~:
11: )nvestffie#(i~ x,~P. v.;iifli~~ly)b~~ moi¥y. .. : .,
"'
i

:, THE·VALUEOFXRPlS i>ERVrVlt'D'.FROtVi'DEFENDANTS~ EFF,ORTS'
'- 13.· ' . -. ·'oNBEHALFOE.THECOMMoN:ENTERPRISE __ ,,,;~"' · ..::
•' ' ' ••·-~~Y""''' ' ._ ' ' ' 0 ,.~v

. .. "'
"

s "'

14-: XRP 1 Value Is a R.esuit of'ricfendants''Efforts
,. "'""'' ' '

,. ..
d~~
fs . -;i)efcndants'Contr:ol Both th'e·Snppiy.ofXRP ildhe.Markefand the:'XRP Ledger,.
,· ~--' ~ __ : :: ..
'' ·.:~'":~ ·. .. ' . --.;:·: :. "' ~-' ': ·: .·:.·~:~:: ~:.-· •.::-- ·----~: :~:· ~: __ : .·. :.... :_:·
' ' " '' '",·

· 22.:·- Sfuce·'its· ·creation, defendants have ·focused .on,·:'hqw,·to create;• •mrunf#~n•. an~ ;'
~ . 1'i: ~crease:· th~:~ ~~l~~:'<>'{m . ..:·Pi;~t,
''" ..
,.t1i~~:: fd~~sect: ..on·..-liinitirig··.t&e
,.,
·,supbtF~£-~x'RP whi~t
. . . . . . . . ... -- .. .. -- .. ·. ;.--:.
also; :; · ;",;, ···~.·~ ~ ~.· ~·

t&· incre.r~~~;:~~~,-us,f~f:i'l:b6r:~~f:t~;:mh~.~t~~:•ap_;tg?;.~~~~i~~::xiU>.·a~.~~~~::~i;~:;·~~.:i:~:;f:;se~~~Y ~~ _.
19 third Iargesfcoin'· by ,ma:rket ·capitalization,. with>a ·market· capitaliz'atio:n ,_of: ~pproximat~W $24· · ·
' ·.~: .•·· • :· ," ~:-~ :: .. -~ . . ' '~!: ;. ·:·· ~:·: . ...... :~;:: .. :~:~::~:~~: ::~~:~~:: .. ~~~;~;: ~ '

io bi!l,~<;m.

21: 23.
' ~
R1ppl~'ipr()y~ded 'hs_fo1md.~rs with'.twe~ty· pilU:9u
" . .' '' '~.. ' : ':· ~' . . "'"
·xRP and. ·h~id.':6~t({the rest.
-::~: "' ': ;

22 deferid?Uts': pl~n .~a~:-io::s~ll' th~ ?ther: eighty,.bil_l~_on.'m_ inb~~ica,Il~, ~never, ~~_duig: IGO. ~n;-
23:: particul~, Rippl~ put-fifty.;five• biliiotiXRP. inio an.escrbw. accou~tjilid:has.the;:~bility to s~ll ~P
;·:<. .. ' ' " ... ~:;· ·,' ,' ·~·; ' .. • ~ :·~·~ :· .·• ~ ~~"···~ .: .. ::, :·:·' ".: '... ::.~ ' '
.. '

25 ~ipp~~;s co~tr~l over XRf's supply is :~t:f~~~t th~ .:?~iher p~pul~r ·.
24.
26.1 c~yptocuqe~Cie-s, such as: ~it~~in:: O~e Of, the !l~n~~r~s::Pf a cfptocurre~c/~~Ftll~~-6(J:ntrol'pf t~e
27 currer1cy·'is
..
s~pposedly:!•deceritrali~eci.•!> tn ~~~tra~t:'to _a goyermt1en~i:; system)~ll.e.r~;
•_,; . "'::···.
f6r ' "'' '' .

.:28. example in the United Stat~s, the Federal Reserve system cor..trols the supply of currency,

. CLASS' ACTION COMPLAINT .
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 7 of 16
u
> ::

•'

1 ..~ry~t~currencies work through distributed ledger technology, whmh has no central administratbr :
2 !,J/~~~tralized data storage. It is the ledger of a cryptocurrency that can record transactio~:;.:;
3 %k~~~n two parties. This instant creation of the XRP security, which its set cap, stands in st~~ ' ~
4 ~~~t:,~t to other well-known cryptocurrencies, such as BitcoiD.,
::s· "~ir16'd.." 1
Ripple created and continues to work on the XRP Ledger, in which XRP!.s,
...
/·t :ad?~t~?n and value depends. 'fhe XRP Ledger, as opposed to Bitcoin, is not decentralized,~~~
8 Ri~pl~: basically admits. The Company has a multiple page ex_I:lanation on "The XRP Ledg~t
:. ' ~;:\: ~>:~ '
9 1• (:on~~~sus Process" on its website. There, Ripple explains how tl:e "nodes" of the network sh~t; i:

10 · ih.ro~ktion about candidate transactions, which validates the t8nsactions. Unlike Bitcoin '~f :~
II Eth~~~' which is open to the world, the XRP Ledger nodes "evaluate proposals from a specifi~
14; set o(peers, called chosen validators [also known as Uniduq 1\ode Lists ("UNLs")]." Th~s6
- ~Tc:~:~ :,·:~ ~.

l3 .UNL~{are chosen by Ripple itself based on what it deems "trusted," meaning nodes that will ri6t
~~: ~II~~~; .,
;'.,
t'5: 26. In its long discussion of the XRP Ledger Consensus Process, Ripple never c~ll~ . :
:

f6 xR:P:;'ct~centralized, though it does confusingly say the ledger ccnsists of "distributed" serv~n,~' : '.
"
:
.,1· : " ·~-~ ' :~ :! ' .
'•

I 7·. .Rathei}it claims to have come up with a plan "to increase dece:::ttralization and ensure that .
~
no' ~" ~~

18\ :~ingle..~ntity has operational control of the XRP Ledger." While the XRP Ledger could one 'day

19:i be d.~~~ntralized, it is not currently. Instead, Ripple admitE that "Beyond our work ~~~
20 dece~tr;uization, we have also focused on refining and improvir:.g the XRP Ledger Consens~~: :
21 .. ProtJ~~i, the algorithm underlying the XRP Ledger." ':' ... '. ·
~ ~i '; ," :
22- 27. On February 6, 2018, BitMEX ran an article titled "The Ripple Story," in th~
' '

43 .wake of XRP's substantial increase in value. In short, the researchers found that "the def~uit
"
•'
24 6~payipur of Rippled nodes effectively hands full control over updating the ledger to til~.
"
"
'
25" Ripp~~.com server" and that "More significant than the disputes is the fact that the Ripple systerrt
.... . ". "> .
26 .... "

27 :1Mi$g ·is ~hen.transactiori~·~e verified and added to the public ledger, known as a blockchaln,
2$ :a.~ -~.l11eans,:iJu-ou¥~,;'¥.hich p.ew bitcoin are released. ·

CLASS ACTION COMPLAINT

Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 8 of 16


"

1:. app_e~s-J?r::a~l,,p~~~t~~~~' :.P,~[P8~~~;: ~o b~; cen~~li~e~ ~n,d is, ,t}:l~~f~f:~:,g~~paps.,~~~~},p_,;:?~ anY:
2 .· interesti~g ·technic~L:~~ara9t~risti~~~: ~-~~h-~as censorsh.ip -~ksistance,·;Wbi'~~::~<?~~~J~~~:~~tco1ii imiy
' '
;::;:
3 hav~L~ .. "
' "

4 28. BifMEk
.
~xpl8,ih~~;i~·:r~~~9ping.. thided_ it_ to
"." ' ' .: '~"..
. coich!cte·_that
.. '
tH¢·x~·:,£~4~~r i~-
' '" ' '' " '.. ' ':" " . " : "" : -. " ': ·:.:: :' " ' " . "' .~. ' .
;,•

.s ce~traih~~d:
1

,,-

:, ,_ I~}al}~a,t:Y}~,18;,~h~--~i~MEX,Res~~~h t~1llll: in.s.tall_~~ -~~:_ran-~' ~pr~r: ()f}~.ippl~4
fofthe·'pilrpose"of'this'' ~:eport:' The. no'de operated by dcn.vnloadin{(a'' list of five
'>:: piibiic' lceys.-:from::th~, !)erver\rLripple.co~,'-~s. the _s~~;een~hofp_cloW; shows. A:u
' fiy~;keys ~ai:~':fiSs~gri,~ci'·tq Rippk'c<;)];n::::ne software irt{ticat~~- ih~t:'f9~r~~f:\he fiy~
key~' are':requir~<l:t9;;~_upp()rf:a·pt:oposal in:ord~r: for 1t::t!:?::be '~cc'el?~~dFshiqe '~lie
h:~"'s' wer~CaH:~downi'oa&~'d:f"iom·the· R.rPP.·'le.cor!i>server,
, , , ., .. ,., ... , •· .,_, __ .. _,, ,_ ......,:c .. ·_,, .... _,., .. ,.,,_ . ,_ ·ru_..,PP· ·te:.is':'essentiail ':in
,_._,. __ .,. ,.,.. ,.,_,. , Y,,_,,
complete':control.:OCnioying· _the· ledger forW-ard; so one:_could 'say that the· system
is:·bentralis~cL' Ihde~2('6fit; nod¢' irtclicat~~' that the keys eXJ:,ir~ Ql).:J: febhi~ry:~ot 8,
G~st:,~Lfew.:qay~::~fte_r ,the_''scr~enshqt},::~!Jlplyin,g'i t~e:,:soft-.y~{wiir·'ne~d'-To'· visit'
Ripple~:~~ffiis sciVer'agEHn i~_:d.ownl6ad anew se~/fkey~(= ;: .: :: . I~r~~~~;
-~ >"
' '
::. ~;: :~ ~ . '~ " '

. 2~:~'---_, _,,:~~:rJ:-~;;f:~:;:Biihl,~~:h:f~:~~,:~~-{f~~,r~:'fep?~,'~~tai_¥~~J1~::,~~~~~;;f,~2:}~~::::·x~y. :; .
ecosy~~~,T·" "Ii\~~-~/~po~-,~~,I:,~~~-:~.t!<?Orid _qu~er ~f 2p17;' the Co~Clf{:~~~tted ~.~~ -~t:p()~t,~nu~:s :
'ts::' !~ w9rk::~r,vthe,xR'PJ~:~edg~~/:iA pwticiilat~:it st~t~d, "[rrt]ost itiipQrtantly,-'W~ ar~.at2~i~r~ting m~ ·
16,, pace of ~ur ifly~si~~~/iAi:the_:~~ Led~~~\o'-b~if~ on i~\P;;.~~~:4p!iffie~:_;~d. sc~l:~i't~ty, ~h ·:
17· .eri~Uic:xiJ:~~:ih~:;~ost iAl~~6~ ~Jt~rprise~g;~~e'digital:ass~(;,' ",,. =' ' "· ·"''·"'" .•. ,., '' . ' .'' .,, ' ;~; .· ,, ::

'' ''"

30. T~tt~:-'~-~f~~~,~~s, ~c;nl:tr,?V~()tlJ.)he ~~P.P.l~,prx& .a,:ri'd ,tlJ.~}ed~~-~-,-~,Il. -~~~f-~-~it i.~
19 base&
~ • • • - ~: >

20' ,,;,':. ·:Derendants'<Et"fort~i'to·Market 'an(f Increase the Value ·ar x:RP ·:
•~ :

"
..
'"
' .. ~
'
.
''"
"" '
- ""
' '" '
.. .. " " '" .. '" "'" .
. <:;

21 31. " · In addition; 'defendants control the value of XRP by co~linuousl_Y;_f~utirig itir ~~ .
.2~ P!e.ss~~.obs~~~pJhe_.!gle.,?f~e security; In the press .release a:mouncing·the:formatjon.oft~e' '; ::

2f 'e~prow ac,~,o:unt:'Rir\r::l~ stated?J:iat: ·_ .: .· ::.'
24 [Th~]., mo'Y-e"uli.derS.~ofes!J~ippte'~:. ~diiimitme:nt -~Q buildii,l.g' XRP:·Uquidli:Y'' aiict~::a :i .I :·
,.
: ··
25:•'
healthy·':''a'Ii4:_trUstea·_-iharke1:.:
.
·L6'tig· "i~fu1:· iili?\Taiue bf ·ai·g-'it~r ·assets: .:_:Wm he
determi~e4.by;:ihekytiiitf:)cR.P ~as emergeq ~8-ih~ only digital ~set '\vith·a cl~ar
26: '' i~t_Uiti?nai.,,':IS~:-f~S~,-d.t::s,i~ed Y>' s.?J~re _a _ n;mlt~F:W,io~-d()~_iar; proble~~t~~- g~o~~l
pa)i1pent:and' liquidit)Cchallenges 'that banks~·- paymenfproviders; and-'corporates
27' fa~{(:::

:zs
... : 'CLASS ACTION COMPLAINT ..
.. "'' "
.. "
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 9 of 16

'
32. -Pi~~'!l~~ing:t}1~_ ~.scrow. account; defend!lllt Garljngb,pu~e -~ta(~c:l :th!'lt, ::';'_Qu~;.go_al i~{ ;_
' : .---~· .: ~·.·:" · · " ' ' · '· ... · ~ .~. ·L'', ,: · ·· .:.c:;:
''. :_,,'., · :. ·~:~.. ::
' '' '· ·:'.~:~.:.i:.·:·:::·

2 distributing;~*'_RP:·i-~ I~Uriceritiviz(! actions· ih~t:b~iid_ irust, __utilit;':~ci liquidity.· We eng~g~ in :; ·
I 'aisttibutiS~:-~i~~t~gi~~':thatwe.:d~p&:ct:,wnrre,~1llfl~ ~: ~tren~h6ri~~:;~i&'::ek~hange: rat~· ag~in~1- i
4· oth~r curr~~d§i:~;;'"ri~r~ij~~~;~~li~~~~~s~6tiritin~~d:: ( :,, '::'' -- _, :; :
. ' . ..; ' " . .. " : '. '. ' .; ' :' ' ~'. . :' ' .: : : ~:. " ... ' ' ' . :
~ . .'. ' . : . ' ;-

:' ·"s ; . r~~,~-~~ve h~;~d ;¢~W~~~~;;[:i~\lj6;:-~arke~: ab~iit': unc6rtrupt)i_;-~~rio~Iiding our -
6
, ongoingL);(@ disfr_i~~ti~n:>The root 'ofihi!(uncertainty-6 the notion that Ripple
1
_ -· might::ofie"dayn;elt-its '61:.68B' XRP in' ~hc:m'arket at::an:/ tim8a:.s.cenar1o' that
7 · · ~q4J,d';-:b~:;-,ba4 ·Jm:.: Iqpple! oJr:: ~elf-irit~rest i~i' -~l'i~qed· -·:witi{'i,tiiiding ~d
riialliHililiiig"a'-11ealtli)rxR:P-in~~-~t. · .:. ---- · . --- :''
' ".

~'. :,. 33. -Iri'aaCiiHo;n_t~_1lmlilng· ~uppiy:odau>;'·ae'fe~dants:~I~g'~tt~mr>~ed''tg.:pyild,cieii.Ian.d ::
J,P if()r ~he s.e£~r~~y_by:aggre~-~~~~ly}narlc~ti!lg ii._ )~ip~l~~s ~~b~it~:io~t~~~s·:::'~~~~::~~:;;;~o~ ~~~ Bu;: ::'
'11 - :~rJ," ~~~~~::~~'1i§:~~_t~-:~ri;;~~-~~~4~g~~: ~~::~h~~lil\~_ p~~s?g ~~ ~h~:-~~-:~~.~- ~y~hJ_:.:;Ho~ -~, ·
12 tP" on certain ofthds~"pag~$~
i ' '" ' ~;~:;~:

13· __ $4. Th~r:e_ i~ Ji~~; l,l, p_l;lg~_Pn.Ripp~~·s·:W~~sit~·4ed'icat~q'i~Uh~P;s\~iifk~t perforlhance.
;'1_4- T~~>pag~:.~gldlf~i~~~fthat ;~~:;dg~~~f:~~\;i~()ITiiriifted to ~~~EiJng i6rn\~i~ltifrin~::~t·~b.rl~ty of '.
XRP m~k~ts."
1'5· .':.. <I:,
Th~''i ~:-:~;hl·~~:dis
);::H;f:-g _________ ..,,P,,lai;'s
.. Y. Ri '''i'b;s;;riiarket.ca 'ittl'i~i~ri:~na\he-value ci~,~~~h::xrJ ::
,.PP .. --· ·-''·· P ... - .......... ,_, __ ,,_, ........ ····r;
16. sedm~r in.u;s::-nona,~s. ':: :
17 · ' -' 35. J(~f~~dfB}~~,:~h~Y~:: ~!S.()--C()~fl.a,~ed .t~e.:. C::8~pan~;~)~~':~~:,?.~f>duct~. ,:'1'i~ _~!Ul: in · ·
18 ,brdei:~ to -·inqr~~~~,~~h~-' ,;.~i~~t'Qf: XRP. Rii''pie:· d~v~Iops-, ~~fi~~;-':r~·~ ::fi~aii6i~i"'i~~tillitions and ·_:
1:9 .·payti1erif!:~~~vicief~-:~h.~i~:l~t~empt,:i~konl'~fu.er,, tli~gs,A~::-~i~Ji~~e\i~~idity::costsPidio~ .:~ :
20 · _~Current, xRa~id, .ffi.ld:~*·~~~.~~E_~Curre~tis ~~~~pl~'s --e-~te¥ri~e.: sci~'V~e sol¥tion ~hat enables: ,.

21 •• ~~~.u~.~~~,r:~;~~:,~~t~,tf.~.~~~~,.~~·:'~i~~";j~:~~0~,··~~.i~~C~t:·r~: ;:
22:; 111es~age ·e_ac.h,·ptb¢r;;i_n::r~al~t~fu,e_:~<f~~lifirmpayni~p~_ detags prior ~oinitiating.the trans~ctioi:t ancf ;-
:h=: ;tb- cJhlf~::d~iix~E~i
~ : .:· .:::
~~~~·. ~L~~tii~~~:;;· '. -xv~~,;~,i~~:fof ;2~rp~:ii~~:: pa~~n~::~r~yid_e;~:: ~d. b~~::wh~; ,:
:·: .. · . = . " -~.· . -~~

24. \vant,:t() :~end pa~brit~"a6~ds~: Y8:ricm~ ;n~~works:J,tsihg: a_ standard: interf~6~:.;~~'''Nei~h6t,_xCurre'ni ·,
2S, nor :~-ia r.~q~iJe th.t?,.use·()f{(~.~;':(' . . :~ _
' " . ' ' ' :: .·:. ~--~' : . ~. ' .

. Th~ o~l~ ~~~d~~t th~t. ~~~all;: ~_ee_~S. :XRP, i~ :xl{ap~d .. xRapid js _
supp~se<;Uy ''.'for, payment'.
2

prpyiders .and ot~er,;:financial-institutions \vlio:wani to minimize liqUidity. costs' while improving
28 their ~;ustomer ei..perience. Because payments into emerging ms-kets often require pre-funded
_-_7-.;.:~ ..
CLASS ACTION COMPLAINT ..
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 10 of 16

'
l .. 3.6. I~:()r~;:instan_c:e,;:,_o_n::}l:ln.e: 28,:- 201-7.;-_ :deff;!ndank Qa;linghous~ ,:p~icipated. in :art.
1
Z ,·interview:ci~i"c~~C. Dur~~i;~~~~~te~iew~ ~efe~da~TGariingh~~se:~is~u~~~J'~~;;·~RP ~~:.a •

:·:3, ~ore :stiblt('idi;~;it~k~ss~t.:' 'raHb;hg :.oth~r:· thing~~;_ defendant~ G~lingh~~~~i :highlf~i~d the: .
;::·:.·, .; ·~;:::::~~~;:\_-::~~:~~~:u~~:~~;:::~::.: :>:.:.·~::~~~-~<i~~:~:;:,:·.:: · .. ..·::;:·: · . ~:·. :> :.. _:·;~::\.-~;::~~ ::.. ·--~-- · ·-·-:;;; "" >~~~:. ..
4; :paymen(teqJ.m¢.\Qgy•:.tP~fRippJ.~ .Was' working _on';', Ill.d<;>irig.so, 'defendant. Gafli.nghouse'·agairi :;
5 : c<>nflated:;·~e.'t~illi~:;;gi:;jcRP\~ii~;~oft~are';J~~~e::~as: ~~~~1~1i~~:.. Ti/~ake ,'~rtf~r~' ~O~Se; .
·.6_· :~ipgl~ th~~·.r~i«;~~!~~t::~::priiii~riA;•[;lli~t;:i~ii&i~W:;that:\~ar~A~~hcJiy,,.t\Ve~tea,1Jy;llthe c~~9·

1: reporter.
. "

8 :::J7. D;u:r.ipg,,a)3loom,~~rg}~~:t.'Y~:_Network interyiew,_ def~nd.ant, G~li11gh()tl:Se st(lted th(lt: ·

9' ~, ~ori\~~i;;~~,i~ pe~Q~'~' ~Q:,~~H,:.thi~,r,e?· ,\Ve·~·;~l;ini;:'f:re~ ~b~~~. 'kJ; ~ ·.
10: inultitrillion:-_dolhit'pl:oblein:::;ii:ouiid'h~qss::bor<;ier paym~);lts. a lo(offridiqn, .its•'very . They~)s

11 ;~low;1ts _exp~h~iye., ~h~ wor~ipg_witlh!l¢·~~~#hltion~. ~~: deliyer~ci~ ~hat,' ~b:-~~~~ie,:~~v~,:~ott~ij, ·

''

. ' " . ..·. ~:.- ~- ~~:_:~::~~:~;~~;~f ::~~:::::i~: .;·~~---- ' ., . --~~~:~::·.<.::~:~::~2:~~:{: ;; i>·· ~- ~::~ " ' -i: ~ ...,:.:.:: ·.··' ;~:
~ ?,.., de_inat\<i..for_ the tokens:and the price will go up~:· F orXRP.we ~-~VE· seen: because' it's reiiitired, it'~ ;
Ps·i·
.;: l
19;
. . .. " . i ~

t9.
'"'".. .... , "
2'L: · ..

22 ,., 3~~,, ._,,._Mfcles ~bgut rtpple'.~, software p~bd.~~~s ·~ft~n ca~.~-e ·a ris,e in:.fue .price of !XRP,' .
23 even tho~gii"ili~::~o are:~~o~:~fi~~~:-''t)i(e4~ants ~,aye;'fc)stere~~t~~s:~:~~i.~A:~hrough ~~;~-own' .
-24·; 'stat¢~e~f~'and ~~r~t'Weet~::".:' F:<ii~~tanc~~;·~~: May:'j•::·2of7;· Rip~le; quote· t«ieeted ·~J(~f~Ie/rr~k'
,&~~daq.com, ~t~ting ';)Rippi~ ado~tion i~:spar~~~~:ii~tereste~ i~g4i&~ 'which:'had an impre~sive
1
· 25! .;
. . . ' : .

· 27 '·loi;a(cilrrency: a~co~hts ai-o~d;'the world, liquiditY costs· are high.'' xRapid d~aniatically Jowers ' ·
2 g·' the capita.I:r~quirementsfor-~i,quic,lity."
. ' . " ' ·';.· 8~- . ..
CLASS ACTION COMPLAINT
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 11 of 16
u

,,
"

1 rally in :~0;i~8,;j~;;~ffl/~8I?-t~~;~':';-,;~:T~.~·'_9PPt~d. _ articlt:_ --~-~sc~sseg-. -~w- fi11~,ci~l: ·instituti~~~ _~eie '
2 addptin{:Ripple'st~9fiware:' products;,:which' ~~in tum(has 'sparke4_jnterest:'in R,jpple~s:''~igital :-

J,.:c~ency,:;, ----I~~i~~:i!'df;:;~x~l~~~!Nt.'•th~;'diff~renp~;:· q~fe~d~ts;:j,i·~i:'~tot~<:t~e~t.i~~:··the artic,le, -,
4' ,~ontinue~ Wg·i~~:dffthe:'fu~i~~:~~;~~re~sion .abol1~ :~~ .Iici( '9~~e~~t§~;,~~~;~~~~~;~~ s~~~fity.
: } '··. :· . '.
·:~:~~~:~ ., ·.. : .·' ·-·:' ·;,
:.~:<:~ ~>::' ,' :_ ·. ', .. ··.· :.:
.~'<;~:·:-.":~~: ~.

5 3?. ~~piHIT.Jy, ~Ii;;¥~)::)6~ :79~ ?_;..Rippl~~hy~6teCi··a :4l101~··rrhm m,i'artitl~-:about ~RP;s
.6 lJiarket i~-~P~t~i~~\1~~:j~~-;~t~t~~g;: '~_'th~;;·~app_eal_·:i~~{ ;':~i~ple '. ''lia~'; :tqvy~d~::;tr~ditiQnat ,_finkei;il ·
..

7 ;inst~tuti().~~\~'~;/6ig::ll4van,t~~~\;;i~~~ha.s ()V~;-::~itcpiri.'i;:-:::H6wever~ :~hl~.-arli_c.l~. co~~~~:'Rip~le's ;
g: ~~~ft~are:~6i~ii:bk~',~i!h
~: . :;r -~
*~:$~i~~e..(),f:X~·;.a cob~~ioll·fos~et:ed:~y~i~~~~·s'~ti6t~d.1w·eet~.·:
--·;:::·· . :.
:~:~·· ..::· .:. ·:
-~::-- . .. .. .~::-- -~ -~· ~~ -~- ~:
:. '
"

9 'L · ~?· Defe~iq~tsJo'ught'bJick aga~rist ~rtid~~ ahd writers thafatt~friptedjo unlink::JCRP
,' :10. ~rbm Ripp~e·.~,o_th~~,~!od~cts. ,g~,~~~u3!X:~!'26l~,.: f~~'~ew Xor,ttnne.i'~~~li~h.e~:':~·:artkl~ by
.:: :t l· Nathani~I' ~~~~·~rerbPP<!r:~).t~fi~d.:'·;·i0.~i:~Q~ 8it9t>ih'¢9mpetiti~.:Rippl~.:cr~ate'~:\vea\~:it>:~v~l ~
12 ~tic~erb~~~;\\ ---, . ., .·. ·----, . . ... . . ., , '
··~ ~ ~F: .. ···---- -.:~: --·:~~-'-,~~:~:-~·~::·~~~L .. . .. · :.. ::~"·: ~:.·.·. :... "
l3 • ':: 4J. ~o.pper; tyv(!~ted.· 'a}qg~,.~'Y::up)i'bout 111!i:'iutide, _st!=l:ti~~>~rover ilie iashiay, l'y<asked
". " .:.:::
:~~~:·.-· "," ::~.:: .
--t:.:·~~·~:~ ">~~:" '·<:·-:: : ~~-- .. ' ". '-~' '
'1'4: 'several p'edpie''cJps((·fo:banksjfb:mh'are, indeed:pi'arthing to' b~gin''hsing Ri~~i~·~'token; m,. in
l' ..... ::

15. :~.• ~.yrio~·~l;TI,~Y~::;kW,t~;~i~::~~~ti'~hr,~J!or~;::s~.em::~o·:&I~~e:·~J~ril:ili~y:;}j·uy·:·i~:i~~iihi:·~urr~hi'J~RP. ·1-;
16 prices. ~~i~.is a s~~~t~~ofwh.~1,X:h.e~~ b_fick: .... , ,; .
l7: ··':: \J\:ciu~L 1-ls_e-:of ).(~- ~y,bank~- ·is. ri~t:.s()#lething' 1\y¢: .h~~d·:~b()ut; ,:I_ fin(tiie
-- rill u!>"absoiutety' 'barflirig,-'as'' do'·Mr tile'blockc1iain:·folkid kilow ·at· hrrge
18 ,, Fis~'· --. :,:: ... ';;: i\C <- ·,
19 "
•,:•::::XRP _i~p.'t._~sedJor.lll.lythii1g .. The lj.ope is_ that som¢ay itwi!J·q~,PY.\Janks,
..
20, "
6.~~;:~E~~~:·~eaily:'~~~\\~arucs siiwat~~g tljat y_et:
'
21 ~~:i I .W8'iild::b'e surprl·~~d if• there haV:e;:been arly: real:bankto :bank transaetioris
" ' :';'.' don~<;w.ith:'it·:(o~i~i"e.: o.f::maybe 'test transactions)!' a~~pi.t~:: pe~ple''~:~irig
22. "

"
'chiiffis t6:.the·co!i'trru:y> '.:-:.: '· _, ,, ' ::· ·;:. · ':::: ·'' ···.::·: :·': ·: ,,. _ ·
23
:- ··~ :· _. It's J19.t. cle~~}<;>}~~ ,:VV.hY:;:J,SitP:wo:u,I~,.b~,}l~.~<i ,bY;::P~ .at~~b ~Rf ~()u~d
"
' " "

' pQtehtihlly· be adopted by::corisumefs-as a payment':-ail;. 'although' they -don't
24: "

y~t:hav~ tne~nipgful,p:aqtion in th~(regard. ··· . ·-
• I h~~~~.r~~~~:·a·'~~~~~~~ntl; lar~i. cata~ysf in the: fu~d~~nWs:ofRipple'io
25

26 j¥~~[fy''~ ~eatef' tlian:'lOx inove in ihe-pii'ce'of$?cR? 'q~er'tl1e l:~?t' motith. '
~.'

27' •:· ·id:~::fe*~,~~~~:~~·re gC?i!lg·to ~<>-~kpa~k.~!J.ZOI·f~:ld'thix~k WTF w~r.~ ~e
28:: thinking."
~ ;

,' :..9.: ...
·. ~ , :· CLASS 'ACTION COI\1{>LAINT ·
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 12 of 16

'1
:
Defendant Garling~ouse responded by tweeting: "Over the last few months I've . ·
.: ..
~
: '

2:. 'jpo~~~~ with ACTUAL banks and payment providers. They are: indeed pll:iniling to use xRapid· .':

3 (our){RJ> liquidity product) in a serious way .... " Ripple's XRP product manager, tweeted: "Dd:: .'

4.. ·~ou~:nk I left #Bitcoin and joined @Ripple to build bank software? Think again. $XRP." .; 1 • :.

5· 43. Accordingly, as shown above, the defendants ac:ed on behalf of the common1: :
... :'!
'l'
.~.; ·enterpfi'se, with the expectation of increase the value ofXRP, and thus causing a profit. :· .
. i'
::1 ,:
•.• i

: ::1 '"

Plaintiff brings this class actibn irtdi~id~~ily. fir$;;·on behalf of all California' : ·
44 .
. ' j ·.: ...
·9:;1 '<;hiz~~S.:-who purchased or otherwise acquired XRP froin Janua.-y 1, 2013 to the' present (tl::~~....
10.· ·;'Cla~s;)). Excluded from the Class are defendants and their fam:.lies, the officers and directors

11·; :and a{filiates of defendants, at all relevant times, members of their immediate families and theif
12· 'i~ega{~~prcsentatives,
~
heirs, successors, or assigns, and any entity in which defendants have oi. :,
'

'," 13:: had ~if:qntrolling interest.
'
l
14; 45. The members of the Class are so numerous tlat joinder of all members
t' IS

\: :I,~: 'i~p~[ic~icable. While the exact number of Class members is unknown to plaintiff at this time an~.'
i6< ·c~~"~1ii~:be ascertained through appropriate discovery, plaintiffbelieves that there are thousand~ ..

t1'i q·(i;n~$1bers in the proposed Class. XRP owners and other members of the Class may b6 .
'i'~ j .i~~~~i~ed from records maintained by Ripple and may be notified of the pendency of this actio~
··::Ii· I :
..
••

1'9.' :by_'m:rii; using the form of notice similar to that customarily used in class actions.
46. Plaintiffs claims are typical of the claims of the members of the Class, as a~l

2'1 ·, members of the Class are similarly affected by defendants' wrongful conduct, as complained o.f

22 · ·herein.

23' 47. Plaintiff,wUI fairly and adequately protect the interests of the members of the'
..
24 • Cl84s''and has retained counsel competent and experienced in class and securities litigation.

25" 48. There are<no unique defenses that may be asserted against plaintiff individually,'

...
26 ~ (l1~tl.ttguished from the other members of the Class. Plaintiff has no interest that is in conflic(
.....
27. ~th, or is antagonistic to, the interests of the members of the Clas5, and has no conflict with any
!~, ' . • :-::;;:- '

-28
~ . . ' '

- ·io::
CLASS Ac'ndN COMPLAINT ·

Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 13 of 16
u

·~ ' ~~~~·

;~ ,:5m~ih?,1::~~~~~:~:~gps;::?i't~~~L~~=:;[~~~:;~~i~t;'~a~!';t8~:;~~)~~~B~~~:::or 'the;~5~~,~~~- and
49 :__ ___
4· . "
.predbmidat~-;:~y-~r_,~j
'. ~ ... : ·.
que$ti~,ns--s~i~iy--aff~cting
'"' .. ..
"··~:~-~~ ..
,:. ~~
i~di\iidiiaL:@'~m.b'~rs-:'of:jh~''ciass
-~· ":~ : ......
....'--Ahi6rtg the•
; ,.,.:·; ""·--.,. '" '" "'. . '-------~--- . "'"'"' .,.,,,,., '": ""' ""'' "•'

5 :ques~~~~s:~bf't~~;~d ;t~q~;~~~~~~:f6;i~~ ,S~:a~:s *~}
6
;~
<~)~';l~:m:;~h,~~ir ,~~,~~,-~i6~fi~i~s;
,7 :· . ~~) w~~the~:d~r6~~~t~\~i~I~t~cfi~¥ cai1forn)~. C9rp9rai1oni{cocte;:'and
s . (9lj ·•r r to,~iki.'~~~\rt 'ill~,:~~ilib&fs' bt ffi<i; C:ii~~ ~l~e 'Sffiill;,M, ~ges· and ~"
9.. ~rop~~:-~fas~t:eJ~f;4~~ges. :. _...
l0{ 5,?:: A\¢1a.._s.~;;a¢ti~;m:;i,s':~lfp¢ri9t-t~: ~ll other ayailabl~,,m.ethofis·Jor. the' fair ,and_:effl~ient

:~,: :!~~:,~j~i~f;~i~Ji~~id~~~~~;~bii~~~!ii::~i~:.:;;ae!·
:~~~~~~
~8;: .a·:c~~s~; {ltticiri. . "'
16: FIRST:CAUSE- OF ACTION: ,,
.:'. ,~g~in:s~:AJI.D~f~*!i~#t~,ana noe!d~2s· tor-iiieiuilr~gistefed_,Qfi~l:~~4:sa.l~.~t>,
It 'Securities'lli Vioiatio'n. of'California Corporations
··~~: ~:~~~~~·~:;~; ·~~:· --.·
Code. Sectio.ns-2511
~~r;;~:>· ·: :: .. ;
0. and 255'()3':
::--
·· ·:.~::::·:~~:; :~;:::~~":~; ·:~·~:~~~-··

IS' ,·:·
19- · ' 5-J. Plaintiff;:;:~I?:f~!'IJdra1~~';;,~Y/refe~.~pce·:,and '· i:ealleg~. each:--and,, every .:·rulega~io~
i2of .~cw~~~~~--~P:?~:~i:;~}fd~~~:t~~;~~::~~titoih~:i~~~]ih. .... -
2I:: . · 5~:· Thl~- .ca~~··-qf:A.~tio:rl't:is::l)rpughi:"'pursuant: t_q§Ciiliforniii ·corporatiorls',:(:::o~~: ._.
::22' .:s~c~~gp~,,~5rrQ::~;~:*~~6~~:~~~-eM~~:f,~-i~~,ci~ss,- ag~~~~~:all-~~fend~ruts,~::. - - ._
.. xR}f~lsecuriti~~'~th:iitili~:~~knin 6:filie califomi~;c~"- oratlons'coctc:·, ·.:
23: ' 53. !:;,•:•:•: > g :;::·:·:; ry,::,:.:::C:"''"::i::::'"""' ::: 'ii_::i'

:z~:: ·: ·. s4. r,;r~;.Ft~i~~iti6~:-~~~t~~~~~~:,r~v~'~be.~.~:-,fi,I~g ,~ili:.~'Y. . ~t~~~,:?-~ :£~d~~~l':g6vegune*t
;;2s: :entity or 'liav~: ~~~ri:iri,~fteC.~,~i~~y~spect'i~;:~~ ~f~h~'6rf~!i~g§::~~~~~d'ii~;~~~· .
·;26 <
"
ss, pefend~t~;ihcf~~4'bfili~Iri,
' :> ':
b§'~ngagi~g i~'i' ih~ ~:,ridtict·ct~scribed -above'\vithi~
'": ' ,. :' ':~- ' "·~" -~

·27 Californi~" d~iectly 9!:i~dir,ectly,
'
~8i~ and> Qrfe~'¥:to
·~:=·t
sell the unicigist~red
' ' ' ' . :. '' '
:'•":'~··-~:
securitie~.
:;:::!" .• ' ' ": .. <, :·. :: :-· ~ : : : : . • .. : :: " '
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 14 of 16

' :~

..
..
,' . 5(). Pl~int'fffav4 m~tn~~rs of::the Class-pwchascd X~co~eqiriii'b!\·from defendants. '
2 ·· 57. .~y re~~;~~;;i{.\~~:-ii~~e~Qihg;.each;:;:~--~~~~ def~h~~!ts h~y~·.u.~~t~~~J'.:~~,~~~~~~, and :
"

'. ' ' J
.i511 0 a~d 25~_~}llit;~~~'~talifofu1~ Cori)6;~~i~ri~:~~d;. . ,.,, '· ·'·~· ,,:.,· . .,_. . ,., ,.._, ,.. ·: ,. ;'
4 .. ::58~ 'is a ~~~rect ~<i pro,xi~a_te. r~s~lt gf ~~[6~d~ts;·;fifi~~~~t~~~~h~~~~,6f secJfitie§,
5 :p~aintiff·~~-:-~~~~~,~~;,~f:~~~:'l~I~~:~l~~~,:~Jiie~~~::~'Uih~g~i''~~~:d11k~~~~~~,:~~iJ{,~ffi~jfi:~~~~~cti~e .;
q: purchis.~~- pt~R,~~~:~iJ.rtii#~j ">:·::.- . ·
~ ,' '' -~ ' .
7

8

;.9
-~·:~:·. ~~~- ·~:~ :~~-~~: ~ -~

10 .,;:~:9. ,~ta~~t~f'H~8~fl?,~;r,~~~~i:;,P~:;,{f~~~tl1ce::Jmd realleg~s:::.each:: and::,_eyery:: all(!gati~m·}
11 co~t~ned·'ab.()\T~.:.~s:tho:ygh 'r~ily:§:~ti~rth·h~tefri. ',
fi . . ... '66:'' . 11,1i~"'calis~.;:()K)X2ti~1l;:'i~:: btqught::pur1)u~nt::to::'eaiifornia::·CorpO'rationi;: Co4~ <:. ':' · ...
~3 ' ke¢ti6n;25$Q~:;:~~-b:e~rur~'~:~~:~n~~,':againsf~~:~~;~~da~ts. . · _:

~;~i
11., p6rs6.n :5;::~i~u6;~:6F&i~;:;p'~i~i:tiqn,_a~l'~~ offlc~r or:Ripp~~--aJ~or. ~thoJ::jze~t t:~pres_entatiye Jr th~
.
18 other:J~f~~ci-~t's. D~~e~d~t~~:~~pple:·lri~ .da~i~ng~~h~~': eac~-~~f~~~~-~~~~~::~d--i~tl~~:~~ and ~
l9. exerhii~d-the'~~e to;;~ause:ih~:unlai~~f'~fr~i1 hna sal~:~f x~l~c~~uri~l~l :~~~!6escri~~d ·heref~. ,.: :,
20 · 62. b:~fertdan~~ Rippl:(:and Garli~~~ouse,::.:sep~rate~;;·:~/¥~~ether, h~J~<~~cie~t· j
ii iptl~<~ to ha~~·i~Y:·~F Il,@'~'?':Jti~p!t t":,~~i{~ Fsi~~~·~~~~~~· : ·: '' ',,, ' .•.• :
22 · 63. Defen,danis Ripple· ~a Garlingi;J.ouse, :$8paratelf C.ttc}geth~rdo.i:rij(y;j)l3,rticipated' :.
23 in, arid!oi:'aide~:~~;;~.f:tr~~?:.~:ttr ruiJ/~{ii~~~~:,;~h~e to:;~~~~lfi:x~:.· '" '' "'" "" ' . ·,'
24~; :: · PRAYER FOR RELIEF ..
." ' ' ' ' ' . "' " ' " ' .. ;·:· . "' '., ' .'· ·: '':: ":' ' ·:::·~ " ' '" "' '"" '"' . ·,:• ' ,. ' ·.. l
:25· WJ:f~B:EfQR,:E;'"pliiiilt_iff;,d~mands
• • • .,:·. . •: . :-:~ :~ .. ~-----
judgment'· on· his:;:be~alf:'anCI')l:tal;
..... : =- . ·• •.
of the: ·.·a.:)
~~
ClciSs as.
:"--~-~:.::: ~i ~
., ,•
26 • ~qllotys: 'f

27.
:28. Class adtlon, appoiritiP:g plaintiff~s:a Class rewesentative under·califomia Rule of Court }i764, .' ··
.. '- ii:.:... ·
. CLASS ACTION COMPLAINT . - ' ..
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 15 of 16 w

"
::~ ; .
~ '-~ : :; ~ '.'

an~,~ppointing plaintifrs counsel as Class counsel;

?:jl B. Awarding damages in favor of plaintiff and the Class against all defendan,t~, ;_

jpint~y and severally, in an amount to be proven at trial, including interest thereon;

Awarding plaintiff and the Class their reasonable costs and expenses incurred)~f •·
·:'?t
5' this:~9tion, including counsel fees and expert fees;
Y, D. Awarding rescission or a rescissory measure of da.nages; and

Awarding equitable, injunctive or other relief, including

'.!:'
','~estiitltion, as deemed appropriate by t)j~
~;r:·: · : qJ\.ii:-t;>' i' ·,: •;:;::;_;:•;:•
., '"" ·.:"·. ""''''' ';' ~·~~~.

9'
"'' '

;•''': Plaintiff demands trial by jury... · .
.. '~:;:: ~~~~ ;~ :t~~: ..
'" ...
ROBBINS ARROYO LLP
BRIAN J. ROB3INS
STEPHEN J. ODDO
:;)~:RIC M. CARF,~~o "'··
"::~--·· . ' ~>: ' t:,,· : ;.->

,,
" .

..
.::!:::
20
ROBBINS GELLER RUDMAN
21 &DOWDLLP
SHAWN A. WllLIAMS (213113) " ..
,' 22 Post Montgomery Center
...
One Montgome:-y Street, Suite 1800
23 San Francisco, CA 94104
24 Telephone: (415) 288-4545
Facsimile: (415) 288-4534
' 25 E-mail: shawnw@rgrdlaw.com
:;::26' DAVID C. WALTON (167268)
BRIAN 0. O'MARA (229737)
.. 27 BRIAN E. COCHRAN (286202)
·-·. is·,, 655 West Broacway, Suite 1900
u
Case 4:18-cv-04790-PJH Document 15-4 Filed 09/07/18 Page 16 of 16

San Diego, CA 92101
Telephone: (6~9) 231-1058
Facsimile: (619) 231-7423
E-mail: davew@rgrdlaw.com
bomara@rgrdlaw.com
lolts@rgrdlaw.com
bcochran@rgrdlaw.com

Attorneys for Plaintiff

'J!:
·'
y

. <: f~'' •'
~ ' {

2o:
21

22' '
..
23:

24

25

'26
27
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 1 of 30

 

 

 

EXHIBIT C
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 2 of 30

''
"

,. " '

.::'1 R.o:BJ3~·s.ARRoVor:tP;;l' · ...,.
,:·: :•:. BiuAN. J}R.OBB~~(f~J:0264)..'~ .. ,:
, ·2 STEP~')~O:OPO.(l74828Y;i ... ·
" ' ERlC M• .CARIDNQ'(3J0.7.65).: ._ .. ,
3·, 6oo B.:stre~(Smte: l~oo> _; ·;: -::
. .' · S<:!n Di~go~•·c::K92lO_L::l': .. ·: ... ::
·' · 4_ T~Ie:ph?ri~:,'(61~).:5~?~~99Q_:.,."
,;_.: facsumle: (619) ?25~399_1 :-:·. ':....
·:~.· E>-mail: l;l:robbjris@rt;>bbinsarrpyo:co:m·;: .. :
., ,· · .. , .. ,. · sodd6@~obb!ris:atroyQ.C9m :• ' '.•'

....., ... ·
"

··;~:·A~~~~m~~o·~~···
;,,
"

·• :·:8. ,:,·; , ..... ,_ ., . ,:' ·::;::~VPErlib~:cbtrR.t c>F'rtm'st.AfE:o~·cA.LifoRNIA .
' • ' • )~~ ·::~· " • ·_- .. ___ ·.~: -·. ' •' < :. -.... ·-- ~·.·,' .: ,._,

. .;
d
.'.
~

::·~ v •

' .::i9 ;j!' ( 1a~c1v~~3;3~
I CMP

,'::,~9.: \. . : Complaint
I 1232943

:l l l l l l l l l~l l l l l l l l l /1
·r'-21
::'iii -- - - - - ___.· ·:

:. 23
: '<'
:.
"

"

.' 28 .. ;. "'
,., '
' .......
., .,,,., .,
"

; ·' · .. '. :t ._. __
'; '' .. : .'.::COMPLAINTFOR
. .
~-' ''.
VIOLATIONS.OFCALIFORNIAt.AW
'
' .. ,
.:.·, :
,, .. . .. '
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 3 of 30

",,
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 4 of 30

Indeeef'a'feature
· . ' '· ·... ,,... :·:::bf.XRP'thatdifferentiates
... ,,,,::, . ,·.·:·::::. ,.....,.. ·. ,.. :., · ·, ·.,ilie.c
_ :, ,ryptoclirrenc'
. .. ... Y, froritothers: siich·as'BitcO'iii
.· ,. :: ·.. ·, ·:·.·:.:,,., is.thatth~
·'" ·"··"'·'·', -::,- ,.-..... ,,, .
"2: s~cu;hY' i~ higii1j'6e~ti~1ii~~I:li?rup~i~::;~rh.~ c~ll1Pariy;cre~~ed. th~ J9tP t~ic~n\ilid:ili~ri~~se~. sat~~ of9l~: .,
3 ~~kens· in:'order;:to;·~d:;itl{·
." . : :. .
operatiQh1fcfud:
.
th~: ~~veloprrit:mt .of:~~
:' >;·;
.:XRJl.:~co·system;
.
L~hi~.lf;iJ). ,tu~, -·~. ;~-~~~ ..,~!-~··''" ........ ,, --:·~:: ;,.,: ' ""'·,:
·'

,4 'i11cr~#~ed tne"vai~~:.?f'~~, ~4}h~'P.o,t~pt~ai'~~hirp~ ~~~ ~'iriVe_st~~~·:::, .. ..· ·
'.· 5. .,. 4.
Des~j~~·~~~:·;,~~~~~:~r,xiJ>: ·~s i secudt;,' ~~iendarits}~h~d ~p'tegi'~~~i)(~RP,and)h~ sale:~f . : :
:6. }XRP;'~id:not, qlgifiJ:;f~r~~~i:~~~k~J~~;~~m J:~gis~ati~n.'·.,Neye~h~l~~~, . rri~Y.'qf:~e;.~epie~e~ta~i~ns
'i 7 ,defehCi.~~~;~~~:e.·r,~~~~~~~~;~~-~cii;:~~sl~~~:~~ ¥~¥~~~m~d fo~,~,'~~~~~~;~~~~P-~~ts ~i oblaJn
8: 'great~i'i~tur~~,o~~tli'6i'f:5c1W::~~~:~/o~r~~dan~§: hav~ sil16e'g~n~Fa.te4:hynA!.~a~: ~f.~1~i6ri§ ~'f dbnar~· in
9· :kos~:;pr()c;J~ds':~y~:i~iririg:.~: '~~::th~::g~l1~r~f'f;~bftb;;: ih:·!Y~~t.~s:·~~~.~~~i1fi; :.~-i~.~~~~::iof:!{~t~al dgi~
~ ·. :~~~·/.:d~:":;·:. :~~~;~n ~;: .·: ·· ~;·. -- · "' ·-- :j:r: --:: ~:-:::;: ~::~~~L: ::: >. ··
1o· offe:rii):gs'(; 11c'd•i)i:.M49h l'ilc¢ m_e·b~tt~f.;.lql9~ tytm,,. initiai'pu'Qlic'off~r_ip.g'('i'i~o·')';' in:art 1¢6': digital'

11 '~$set~':are:~~:tk'~~:'9oii$W~~~'iily~c4~g~ f()r iegal. "ten~er
< :--: ' ~~ :·~-~~-.
~i: yrypto~w:r~J;lci~~:(~q~fi~ft~Ji·B!t~~in
:__ ",'" ,'
'"·:~:::~:: ''++::~:; ~~<~<:"
anq
: "',' >·.
"-::·::~ .-~. '<~~-·~ !'·:::~~:<~~-·:~:~· :;.::~;: ~.··~~<

l7. E~eieum)_.,, j~~~e. :tok~~~-,g~~~t~iy.give -~~ })~rch~~r:.~~i?l:ls, r.i~h~~o~ -~~~}j:6~¥~#~'ri .n~nv9rk #tid ,..
i3 • r~se~~i~li~~: s~~ff~;:~~~~;~86~fhlij':~g~~JR:ih~b~tdf~~ i~ ~:fi;'cii: ·tih£6~ftilii~!~1~Yi8§~;~W~t~,~~poni~ a·
14 ?7a~~~Jof,~~§~~g~~~~~''fjf,~~~~e,§''~~i~~il:4.>: ., .:.
15 ·; 5. Pl~~1if.f' bl}~g~:;~hi{~~if:fo~ 'J~yl¥f!,tpry' r~lief that:~ ·:is.{Ti{fact~''<i' sec~o/ u~(ier:
16; AJ?pliA~P.~~ lavys;':~a·.fqr .d~~;~ge~;:r~~di~~i~n;arii61her reli~f as. det~le.g, hJ~~i~. .:~::::~: . ' ..

17. ' >JuRISDICTiON AND vENUE "
.. ':'":·.vfi.:'t_'.'~~.::::-·:,"'""·'"',· . , ". ·"~~<- .".:,,' :·····.· .•-_~·-<:·· ·__ .. _ ·::
i8 · ·
:
6. The. claims. .alleg~d
--~~-~~ .
herein arise under
-~ "~+~:·::::·!:~: .
§§25110, 2S5Q3·:·8n_a 25504 of the Oilifornia
~.~;~~. .. .. > :·:~-- :~~:~~:<~·:~· ::::~::-~:::·::.:; ::.!::::~ -~.: :~.:·

19 :Corporati6ri~:::c:6d.e:lJthci":;,,Comox~ti.9J:i~·
' :: ·;· ·:
~·;:.
Coq~'\). Jurisqiction:is'',g.otrfet:t:~d :b;·. A.tt~-'\.{::§:u)'
.:·::·:·:
··~"::: --~~-- .:.:.:::
of\~~.. · · :".: ·::~--~: ~ ~~- -

20 ,Caliid~~ 'con~titvtiqrt'V:t::Q~~:i~~ prop~r'p:ur~~ant tq tile Californifo: :G9~fe ~f ti~~{P~q~~gtii~:·;' . .
21 ' · r 1. T~~~~i;~k?1~~~::()r1ai:~~mpl~~~a ·a~~~re!n:bccilirecn'~:~ruil~iaiea· calin~,:~iic1Uaing:t4~, :
22: \mi~¥bi•'~~~fi'o"i~~~~f~i~[~~:~;~g~Ii~i:~s,;~~t~~~~~i·~:,C..?~~;~·:±~:~?.4,~tibn~~~.efe~d.~X1~~,:~2;i~?~~t~a.~a/O,r: ;
23 bonduct, bti~'iriess., hi' fuis·:.c:6fuicyq; sigriWi~~t~y~nt~ Jhilt :·led t(). th~.' sal~:·¢fJmregist~te.g s~C\urjtiy.s
24, ~ccuri~~li:n:thi~:·2~~ty::~d:~~~~~~~~~,~~i~t~e~s~s:~~·f~c~te~,f~~hf~~t~Jh~,::6fl bi:f9~d in fui~: ·
25 C~uri(y,,, i~; ~~p]g;'RJppi6 fhli&i';;\'6~~\!~ ffuril, ani!·ts bi.bk~d by J.;i,!~ ;~lf.ii fi~s, such' as '.
26 ,~ndr,~~ssen ijonrwi~z;:w1:J.ich:.i~JQyat~d i11 t4is ,col111ty; ,ha,s .s<?Ji9it~d .aJ?:d s914 ~ ,~<?, inve,?t().rs .located ·
:2T 4i·thi~'cciUht~;;an(fls'ru~:l)y:;&eten:aa:nt thiriiri~liouse, who: live's in.iliis c6ti~iY.
::28

. ~ -·~--: ·--~ .. · ~-~~" " :
• > • ' ,• • • • • • > ","""').:. --:.- .... ~"'.1" ...
' . :::;COMPLAINT FORVIOLATIONS OF CALIFORNIA LAW:,'
:-:~~-~~- -~ ~~~~" ~ "" : ~ ': . ...... ' :
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 5 of 30

·l 8~:
-., '
-'
"
:.fu_q6i$~~~ii.~lli-th~ a~~'~iegoo iri ·thi;.~oili:pt~in~;d~f~rirumt~;·ctire~tly .~r-ili(fuectly:, .
•'-~ • ' ' <' . •• ' . • .• ' . . • • ' •• • • ... ; • • •. • • ; • •• • .• • ' .. ". . • • .

. :2: ~se4 ~~:;~#~~~: ·ai\~(w~~~D,t,~i~i~s· 9f int~z:~t~t.e, :co~~,er~e~-~9i~gi~g;, ~ut::~9t. l~ted. tti?~:tl1~. ~~C: :' . .
'>3. :int~~~~c·teie~h9~e.eo~uilicat1~~-:a#~nlie fa~ili~esofth~'na~b~ts~curl~~-~~Ice~.' · :. " · .:·.
{ • • • ' • ' ' ~ • • < • -. •• • ' •••• < • " • ':~ } • :-:-- •• • " • • • • • • • " • • " • • • •• " • • <• ••• : •' • '

' ,4 '·. ... .. .: ._PARTIES: ...
.... ·~ ;. . --.,-t,.-- ,: •'~~~n.~iff~~~~~-q9~~~tj~_a.ci~~Ii:~rc~~~orrria.,;)\'~~~ptir9~~~~d.:t?.ew?n1piote4and. ·.'
6.· :§oicl ·by~ d~feilciaflts~·:~inqh:w~ )ipt·r~~i~tered .~: ~--seeWity :b)r'cier~rici~~-·ari,~r ~-b~i ~bject 'to. -~Y .·
·.···
~- __ .. ·· __ " .'-~~ . .·:· .. ".. : ." '• __... _:; . . .. ''
::.·~: ~ ·.,.~)·,~·. ~-·-·.·:··._:·· ,: ;;;J~· ~-~~-~-: ":_:~--" '·:~-. ~~·-:','•" :--~~ ·.·~·' ~. i

e:k~m~rlqn:~;t::~~-~~~~o~.!-~::.....'; .. ' " ' ' '. . '' .. ' . .
.. > 8 ' .: · :ifi... · '·:lJ..~ft:ri4~t)tl;l?k::L~6s;;::I~c.' h~sJts J:>iiricip.af pi~q~ qf:'pus.i~e~s:· ili·~ari:: :Fraitcis~o,
9 'Calrf9plia: -~~P·~~-~re~t6d;~4:~oid ·~: t~o~g4~:~, ;~-~o.IfcJied··~i;~~cp~e-~ ~f~-,~om.:
'~;cri!ltirr'~~··riiel~~~~~,
'. ' ' .. '
c4eltfi.~~·hhf~i~~·for.it~-6~:
·.· :
~~-· ', ' :.
~~~efi~.~d:~e:~~ti~~t.
:<· '' : '
~·-- '
·<?.f it:~~~~~~thi~s. ~J_6Wne!s,· ;. ·
' .: ;:.' " ' :
.::~ ·:~ : .·.:.: ',' -~·

Tf such: aidefe~dant G:arlin@6us¢:' ,.
• ·~::, '> -~ ', > >' , '' > :~-· ~ '····. ,,,Y'>( ~.; f " > '.:·. >

. i2 ) 1.: .. JD~fendaritru:u..LLC·h~jtspfincipal'placeofbusmess iri'sim.Frtilicisc<?::cruiforni~
:i'3. -~.r.{~oid:~,:~~:~;~~~~t.~a;:~~:~~6h~#es:·.o(~:~o¥;thln~i~·~n~;th~J1I~~:;~o!.1ts·~~~6~-~~f
·i4 ·an~ til~:§ep~fi~:6p~s~p'ar:~4i~: _ruppie,''~~ ,it{eie~11~ives -~~. o#er,~~.,~.ul1~,¥- ~~fen~1 _qck~ui~1loili3~:
15 : '.' : j{. :>ueii~4~i"Brad!~Y~Gari~righ§~se.is,th~~-EO ort~b~C~~p~y.)H,e)ives:iti: Atherto~,
:
1
)6, c~Iif~~a.·.....·~&at-I~ilio.use,.·6iclies~~t¢~(th~:'sai~-
: > ;'" '' ' :::.. , .':. : -.: '
~ ;··~ '": ' "",
6rx~·,bx.ruppl~!,~i~::Wimd' ·~oiidt¢di·th~ ,:·
~-'· "~~ ·~. ~--~ '"'<" ', '• ' ' ',·,:· ' '• ' ' . . '", • ,··.: ,, ,·: ·~'·' "::' · .... '

.1:7'. pmcha~e;>_:or:i~.frotji'plmpti:ff:~i~1¥:c·l~s~l~~-his·,o\vb:
~;""' .. -~··; ··:·::::~
benefif~(ftlie.pefiefif·ci:rrupple~.,
···:·.:--·· :··:; " ''":' "'",.""''" ..... '' '',,"' .· .. "' .. > :;'-'':, '._' ,'',
... · ·:--~ ·~--·:·: ~-·

·1.8 · ....... _1,3; . ·:,~~pej~e~#1~~,~~:cap~cfties_~f~~feiidaitt5.su~d-~~r~in'Uil4er~~it9rciac9d€J~fpjvit
··19 .· froc~dllie .§17~,~~: Do~~-;.i. llit9bgh:~.s:~,'i~6ius~ve, ·a.r~ pr~se~tly.ri,bt)~il~~- !t)p}~intitt:w~o 'the~efofe
.. ··zd · :s~e~· fues~ ·def~Ii~ant~ bY' ~uc~ ~6ti.iio~s':ti~e{.}>la~~fr:win ~eek to'~~~~t~~-.co~phiint and'incluqe
':.,21 the~e 'tjb~ cl~fe~~~~~~-~e:p~§~ .~4·~~~id~~~s:w~~~ •rl;ey :are,as~~rtai~~~-j~acli ofth'e flcn!io~iy ·
.• 22 riam~d\j.eJ:fjndai'iiS·
,· ·::·:: ,, " ', '.
i~:res~;~ib)e
:;:i-.'
:#~: scime fuanp,er ror th~-dohtiu¢~ aub'g~a.
<~-~
:p~~~M.-~~'Lfo~ th~-iriJurie~·
<" ·::·' .' .·· ·' :," ,,
~ . '.,., "
,:<'-·' ·--~~"· ~·:· " ' ' ,:, ' < ' .. ' ''·' "':· ' . . ,,' . ',. ' ,, ' -~

,; 23 ·su~e,~ed,by_~~j~~.~~-~:-:''" .. ·. · · ..
,l•, "
-:24
"'

:!:'as jlipple,(?~~a~~--~•;:>. · . . . · .... ·. ...
.::. :~6 -: :: ' ··14::,.· :Ripple's .pJ.iniiJiy busm~~~- inyQlves the 6per~tioii 6f ail operi i~dge~.pj-otoq~l, ·p~yment,
:27 ·~·.xc~g~))~~r(···~·;tive·~;oc~CyjO~ihb·~v;kiy.~·~.tlw• ~··to~·;,bicl,.
.is·· shrves M~o1h·@ ..irive8~erit
',, .. ··.
.4iJ~e.CompaD.y.(as. silciror:xi(P.· ~e use4
•' .·~"
~o fu!l,d ·c~n.I>any
.......--~· ··.. op~rations~
,.,•,'" ~···." ·~;· ·,: ., .,. .. . ., ' ' ~ ' ·--~~-' ''

< '"

''" ' .. "' ·: . '. ' . " •'' .·,.- 3- :
,· ... <COMP~~T f(:}~~!~OL'ATJ:ON~ OF CALIFORNIA: LAW :· .
... ''
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 6 of 30

,1 ,\vith tli6~xp~da~6n. that these investid~IiiswitUrtcre~e, the t6k:~ris' v~ii~}and~.~ !A~lms:C>f cixchang~ ·. .
' '""' •• < ~-·' ·~ ~'' '. u ,. • " •• • •• : ' • • ::. ··-· ..... -~ •• ·'. ~ ".. {'• : ; ·., ••• < • ~ ~ • • •~ : .... ··~.·· • • • ·' ' •

·2· pro~Qiei~y-ru~pi~~·'ui~:RiPJ>ks)'5t~~is:ba5eda!P~d:~em.Le<JgeJ;~:th~xRP·~~~,CQn5iS!sor ·
: · 3.: '~~~·~~&i~. ?~~·l;cin~~~s~«hwcil a#pt.~d p~riee~sl#actlo~s~ ·. pi_el1f'~ppi~h.~~ons.~ig{i ~4:~e~d :
_, ·~:· ··1rnn~a6ii9~;·to'.~6a~s]\&~c~:·$e~:iel~y:·U1~-~e· caridiaat~:~~adi~¥··~~hghout:th.~.·~eiw~ik.fot
·s· :;;oce~~~~-·: ft~~ac~i~fi~:·ai~· ~e~·_veri±i~d -~~ ·b~cb~~·part:·of ili8jazy~· L6dg~rhi~i~ritlm>~gk~ :
.· 6. 'coh~~~~~s;$r()c.ess,. ··E~~~.tr~s~~~~~~·iU·~RP.:must ti~ ~ade ~Y· ftPd thr~ug~:th~:~::t~~ge~,:w~~~·is
···:.7 ~~~~~~~;:~J!·,d~fe~~~:.;,.·~-·;td'~~::i~ . ~IJ,~ri:·an::~cbo~~:·~#th~·_x.@)~~dgei;::.:~·ti~~i:is:f~Jir~~t~;..·
' . ::iL·.' .'defe~danbi'to'nuuntai~:~iri1hlrilriili acco~t)jaianc~
·.. ' .:. , .. , ·:· ·.. ''.:: ,' ,···:: .,.,... v. ·:.::·; :·· .: ".: .,
~f20 XRP: :F~ennofe 'each ti~e akn;actlon u; .
: . : .·· .... ,: ' .. :· '··:' ·:.::." ..... .;~· ·.. ' .:: .. .... ' : ..'.' '. ' ... '

'9. ~-:~--~?~~;.:4ef~~~~~,f~~Y~~\tt;@~~~~~#~6~fff?~:~~'~aP~.~hi~~~;Jl~~~· 1 ·::·: ,, . . . .. .. .
IO: ': .. , .i~.,.:,;:·, :u~1ii~· ri~~~;~~eiu;ies ·S.~Rl!··~s,Bitc:Oir{irilci· B.ili~r~ilin~:·w~16~. a~e·.,;Mn.ed:by.those · .
.IV :~aiia~ii~~:,ir~~~~6ti6~s.:on:tii~'it 'ri~~o~lci,.i?Jppl_e, cl"e~;~·the· ~ ob .blllioh XiJ. :~~~pl)d~~lr: :T~€h~
~-- ·:·~" ' ' :. . ·..'· •' ' '.·:
~:' .·-·~=~ ' .·,···. . . . .. ' ' ' ·: ... ,. . ·__ ·.:· .:.·;.". . . .
~ ··~~ -~-·-~· ~-··

12 b~Iii6hxR.P~&;2o%'9filie:t6t~i:XRP:·suppiy;·V.·~(egiv~ri1:oili~'i~cli~i.<ili.~:founae~ of"RiJ>pie,2 .~tli~e ..
I

'·•!3 .•.~~~·~6~~~~~~~,~~¥.~Y:'~~~9~~Y-.:Asf~~;~e:~g~U~On;~ hel4~~f*;;fi.
i.!r 9o.inpapy:}:>erJe>4i~8Jly.:s.ells·XRg·from)ts)~pply aild'·us~s·~~ proc~eds _:frqm th:ese· sales tO. f\in~
-~ ·~·-· .... · ,,
··~:·· :,· .··:.·'" ......
' ...' ', ",' ···~.: -~:' ~- ,",' "''::
"'' .: ' ·~--

15 'c6~1Ji!riy 9peratio~s..'~cHn1prpv~;~e:~ ~c6syste~LRipple's. :f~~d~rs ~d :9ther¢otupflriy'i~iders
r6 ·~y{~,o:!~~~ch~4:~#~~~1~~r~t.~ ~~~itp?f~~#f~:J~~~s . Iri'i~~-~9is·:.rJ~pi~:_co~f~~d~r · .
' 17· .chri~·
. ""
iai:s¢ri
. .....
.
~-~~· riatri~~
:·~
. ane.'9fthe ri~h~~tpe'9pi6.in th~:Uriit~d
: : :: :.: ~ '-' . ' ; .. .
St~te.s,\Vith:an
. . .
'
~~tini~ted n,et'W,o~lJ.:qf-
. .... :·."
' ' ' ' ' " ' ' " " . " . . ., ' ' ' ' " ' ' "' ' " . '

·is· $59~9bii)~p~, iJdJri~fly:d~~;t() 't4eiri~~~~s~·~n..val_1Je 'ofx~:·a~d.11ls pe~~ori:a19W.riersh,ip -~fbi~lions of
',. ,·.· ,·· •• •• ·:- • •• •• ·:: ', '.' ' ' • •• ·:~~ ~·:·-~· .-~~- --~- • •••• : -~' -~ •• < ••• •• ·;'

r9 ?mr.t~k~n:s:rina·~~!gtiifi'q~i~~¢~S,~p\stak:e ii1·th~ c6¥p~rly: : 3
,,· "/, '

,.2b , . .i~::· .. rupple·~~~-·b~~ri:.~;i~'Jize~t:b~catise oftlie·-~~bri-aiize~ti1~t~e'~f'it~·n6~ork ror·XR:P·;
•:71 ~sp~~iaii; wh~~ ~~~P~~d,io'·~~ h~~~r~.;~r~the;t~l;:distrlb~~~~r~:~i~c~enciessu~has BitcPhl.·
22 \ii~~4~jn~~~dJ~.1.~~~i~v~r ~e~:~sYs#>'Y~ in.2g0~_,if#O~~ th~ ~~~~Ni;~Ie ·
:~3. i_ ·.:~Th{b~e~i'miriihi~: tra~action· cbst ~~ <w()poJ xRP; afili{?ugh ihi!)· cost. caP-:be 1~preas_ed by
. . defend~~s~ .. This'f~afiir¢ ofXRP. tran~actions benefits:¢ieferidants 'be~al:IS~ it ·m:?kes, their sto:Ckpile C?f --:
24

. ,.•'!: •.S~~;Ji~1!:~:b (•~c~h")·~h~#·9.~;~~o~;~,·~¥Arllim.Bntt6 •
.· . z7·: .~~~~.c;,b:c:~di8~0l!il,jflip~ie~co:~der·is~n9\¥'~~"~~the-iio0~.,:fu'!"~'~-

...... -

. .. - ... ' ' ' ' ' -~
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 7 of 30

" :i "
"
' ,. "
"
'"
'
ho-foufid:6r; McCaleb'Jollowii@ anLinte.tria:kdisput~{ 'tfi~··ability 'of Rip :IeJq:conttol the flo.w ~f xRP
2. ~etmin~;~~,~~:~~ ~~i~e~~~:,;:~~~ ~.w;~~ ;hili~ £2~:±,: ~'fflJi"i/>~':~·~~bruky .·
3 . ~01 8:..8, I~P9tt::J::>y'BitMEX Re.sear~h st~ted that a test:oftlie Ripple systeip revealed that ·au flv~ public

4 fey~ u~~·t1!:YJ~,",~fr4~o.~~d'dtp'~~f~',"rJI',P,IE:r.~~~lli~'~·fuPP,!,~;:~."~e~aiiy.if,
5 ; \:()mp)~te controi;'of\noyin[fthe l~dgerJofV\icrrd. "4 1'fitfrepor(conclude4't4at Rippl~!s' c.Jaims that the
6 ;~·~ste~·~~~·w1:i~~ib~~~d'':~~Ul~;ihie:mr~I~~dil1~,:a~,;~PIJ1#.e~ient~~~~-~~rtrbii~B·t~~:~;fe~F:~,r~roc~~s·.;
7 • ·As ihe. steward~:of:liie:XRP e.cosy~t~ni'i!d~f~~ciants' slic~~ss .iii:4e\t~Iopi#g;j)rqilf6,~ng, aritf~airitairiipg ·

1:, ~~~~rE:i~::~~;~~sii~~~;:ii;:~~~s~1 .
11 :e,cosysteril, :~.~.·sh tran8:~6tiB~m1xRP·:involves .a.transactfbh 'dih~'Ctl)V:\Yith ,det~riaants:.;, ·--
•< -~ •

p:· ~ipp~e.Pp4~f~s :~RP "' . ' ~ -~

~;: ~v.~~ ~~~~~:::!~r~~t~::~=·==r;:~:~~~~:t~~~ .
..

16

17

· · ~ ~-- ~tr - · · ·
19 ·?~squssed:.~tJettgt[i:~y,;pw;pqp:_~cl:VallJ.e,g.{,using,X@,, (!(?glpf:l..I'ec1;t()::qthe.r,sys1~m!3:: ..
"'

~~! <· ts:'. o~~:;~fthe'J.Ilqs(s~gri:l.fic~ntch~ges.~O.:ilie ~;e;§o.system:C?:C~l:lt:r~c1:iP:,1heJa,tte~·half of ·
.21[· ~ot5 ... In,~~:tOt5;'regrii~~fY :r&riMes'ili~,;~:~~.s~~~';:~ne~ruppJe'i~'~:~·$7oo,H.f1. •·
12i twillfully'' vjolati1ig th¢~B.am< S¢crecy;A¢t1J:Y selling XRP:,\vithoutotJt~Qip.gJ}J.er:~equired a1,1tliorization: ·

.;1•
'25:
~~fl~:~=;::;!;r:~~,~~~1~~!~;~~~~~;~~~~~::i~f~[;3~·:
,a ril.m~ber oft~iJ1edial: meas!Jfes;' i,n(!~ljdiiig_registratiotfwith' Fip.GEl":fwith~n '3.0::ctay(of,the.ag~eement .
,, . -~--~~·: .. ··· · "" .·:"· ·-- . ~ .. :~:::~:,._. ~::~... , . ·-- ~·· .. .:: >~:.:~ :;~.-~ . ~· ;:L}i :t:~;;:;. ~· .

6 4
} '' · ·· ·rh~· ~i.p~~~;~i~rJI;)~.it¥f:~;~~~;~:~~:_c:~~:·;~~::~R1 ~)~- ~~ps_~i&1~~:~~trii.~~-:~,?~iih~t~ipp!~-stbr)'l::'·, _.
.,. , ~#psi/(r,ipple.conV~~IT:~~~~~ho's(.modet:j)~pe~.~df. ..
.. '. :, <~~:~::,r::~~Y;:
,•.-

'"'
"
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 8 of 30

,.. .!':

~~o~·9.~~r;~~~~lloriin~~~~~i~Q~~~§?~~~~·'xn,·~·~u~j
l11pnthS~ Ri:P'Pt~·uP4ii#!d)he~·:i,let:WQ~ aQ.~ e~<?.system to: &miply¥4fu',th~ ~ettl~me~t agreeiil.~P.t:, In
~.~::.-~ ' :.: ~-l: ~·::·~~',. ~:·: ··~-: '( ." .. ·. ~~-~, ·. ~
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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 11 of 30

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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 17 of 30

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;:\' ,,\~' • :\'i'Thisjs~!miCii'ri:l:ore:effiCientthan"our recess toda . We'cllike
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11 : "46; As'all~ger:l ber~in;• defenc;iants haye repe?tedly,a~kno.wl~dgeq the obvious: development- · '

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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 18 of 30

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so:·~ In addition~· defenaants;"and•:Ripph~ ir(partitular,. are t¢sponsibie:Jor maintairiipg the.

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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 19 of 30

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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 20 of 30

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·15' suppiY::9f JQU>: in: escrq:\v: to: proviqe: ~·supply·;pregi~tfipility ,AA4J:r~t¢~, 4~!ll:thY: $XR.P :markets."- ':. : :· . ·' ,;
\6 Ilil'Pie el'~~i~§ ne~:£6!nPi~~nvoi6\>~r'~e ~L~~~;fSeif''Mri~t~k~ ]3tt,MEk~~s..f~h, ; •· ,' '
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18 :c~ri~~fz~d [~ici;;8~: .fuppi~~t~~fs.its ~~~fr~~-~v~r th~-x~ .l,~cigerai ~:k~~an~~~:fof~J', c6ri~¢nciili~ .:.
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19 :~a~ gov~in~¢e'.!'may, ~-;\?vh;~re)ffir wo~i-s~Wt1:c~~tiy :~s~~i~he$'~t~~iitifom~Bit9oiJ1,'Eih.¢reiull~· \·
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· Si :·:Market i>~;iorinance, :fitt!;s://rippJe~¢9mi~ip/~arlc~t~perfow~~~r(iaJ?t visii¢d 'May 23, :~oi 8)~ :
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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 23 of 30

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2 ·: 'teclnj6i~-gy. ili~hio~~:b.6t:h~ye,pl~~ih~ioy~~hanc¢:.is :ho{p~iat~bie:f9rt~g~::~k~~bi1sh~d-~olJ.lp~ie~." 85 ·:- ...
3· .. . :· -~;-; n6fendants ·.J~~~selv~rhaye\:eco gnize/ .that::; ~~:::~inves~~·rs ha~e· :':~\~~soriable '
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'expect~~iori; pf p;~,~t~:::d.edv~d,::fi:9T:~ g~f~~~~t:~\ ·.eff<?rt~;:'io·:Jmp~~~¢'·ili~.,~ey:::~~8~Y,st~~~;·,~4.; h~ve' ·
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8 increase the_ token's pric'e or. tgjustify its PPS~ appreciation~ ·and the·co_l11P~Y has· i_s,s:u~~ a'w}tite paper. '
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12 ·by ih¢· xRP:·t.~.d~~~;~--~~;~~~~~:~:i~,·~~J~ihg_ cr?,~:~~bdr~~r_pf!~~hts,~J:_l~~~·:~~opti9!i'.b~·:i~~-~!~ti~nf, ·
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13 pefepC1ririi~:·.h,~{e::~~~~~~:,\~dht~g!!:~4gR:i~k~~f:.~~PPle's:;~~~1~¢ia~~::~~~-tiii&r~~-l~Nsh'':~e'ltairectiy

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16 :the value o~~e'xiJ::£~d er ~d ~. :#b~ exam 1~: ~n ~-''ril::~·:l•:,';oi:{~ ,.,.,i'~'~dilil~~dthaUt':had
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IT ',;inv~st~d '-$25; millioh \r~· xR,1~"'t6--tl'i~ck~h~ 'cap~!~i: ~~~ifei"t\f; ·-r~p,•;,: tb::'\\iupp6;t~~~':,devei6~ ;
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[XRP]. use_, G~es>l:)eyqnd''paym~nts.n. ,::::: -Rippl~'s:,:Senior,;.viC~ .. PresidenLof,Business ··
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26 ·~7 Ripp{e '!?1a~ts .. $jj .· ~i;l~jn. .Jo Drive. }nngva,tion .in Blockc/1({~11 ;, a~4 .Ptiitql 'Ass:~tS.: '
https://ripple:~~~insigJ:l:ts/ripple:"inyests-2?~million~to:.drive:.innov~go~~i.~-plq~kchaiil~~(l.;digital-
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COMPLAINT FOR VIOLATIONS OFC~LIFORNIA LAW-- ·
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 24 of 30

:: i · @blockchaincap's ne~ flit;;djs'the:ti_tstfukl J?()t:th~Iisf. c6ntri~\lti9iito'y~fltii!~s;tliatfri,ftlier:M;YeJop the
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4. tedg~r aiid :X:J:Ul ,; ~th~r; ~s ~Ief~rldant~i·ow:~ark;etfug !ll*~~;clecn;,tbe profit~:ie~~<m~bJy ~~pected to. · :;
5 b.·e derived;~:·in~e~tin~.i~:~ ar~-s~le~y de~endent6~_~e:te~~c~~~:~:~epielieUri~::~~:~ruuigerial ' '· :'~ :>\,,

6.. e~fO~~i:6f aef~h?~tSH~d~_tl.leir~g~~~~;;;~~-~~D;l~~~yee~~>~i~i~tif(~~;j~~~:.CJ~§~.:~~~g~~~~~::~*pect~d ::: .. ·.:
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12 · and ~~:~}f'fillate~.
i3 Recertns'Ec·dulaance:Undermines. Ripple~s D.enials
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J4' ,, ' 65,:' Rl~ple.h~h~mg ~~~me~·'th~t xR.P.}s. not a se6tilit;;m:u\s\~6&htly:as.April;:h~:,2of8;,
: 1s ;~pp!f;s cmfW~~g Si,at~J~:~.IdCNff'hian~;,, ··~~:u~i~;~~\f~:~~~.·.~~~iliity..W•
··16:· ~~on't l~~:]t ·~~~· si~9~:~:~ :~o,*·.~~~t;,\~;,cuiit{ ,i_s: bas:~~.:?~;ilie.. ~~t~~·{;;'38:~~~;:t80u~~~-:·In~~f:~~~i :ruppJe: .
:if .claims that,XRP is ap~nriril:odity; suchas golq;: Purchasers ofXRP did'ri()t ha:ve·an:y_rc;:asc)P, to challepge
18 th~se·9oniention;(from;ih~ ~bmpan;~::~i~en:~~e. l,Ulcie~;:~iate of:iegula~:on,and.qJ~~6ki{~~b'IYingi~~: ....
,'!' ::· :._ ·: . " . ··--' -~.: •. ~· :.~ ~ ":~ ',' '.:~ ~" "! ~ -~·:--·~." ·::~ :~: ~~ .

19 ;unchartere,d ~a.nd::;cap~ gfqJo.cl,q~P,~iri)~chnoJqgie,1?> Thi~r s_tate,• <;>f ciff££it~,l;las;qrily· t~c¢ntly:_Ql:uwged,~:' a.S:
: ~: ' ~ ' :' '

20 · re:gul~t?r~. ~1,~ve ~~g~n to '~t~~y_i~~ ·d~~~g; g1,1idance.;t~<1t: ~ndermhles•· defendEiflt;PciJrii~ls'; an:d tik •
21 centr8lized. n~tille of)CRP ,il;l Ripple hal?, be~_oi:p.e. more apparent.
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22 ;.;;:66.::;_;,·::I~:[~'iy~8F;u:,s,.:§.~~Uiiti.~s'ancfE~c.~.~ge:c:?w~~,~~.~tgn:,e:···:~fS:l'~.P:~,*'~'W:ci~7 s~ion:~I1~·'
23 legality of~e~ist~r~q t9iceh.'s~es, ~'lith as th~,s~es o:fXRP,,;uid riiad.e. Clear that sellers:ofuhregist~fed
24
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COMPLAINT FqR VIOLATIONS OF CALIF()RN~A LAW:
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 25 of 30

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'.. ' .. .... . " ' ''"' '" g '•' y
:
2 ~'conc~rn~~r'tiJ.~i.
' .. . ''"'" --:··:"
~~::~ising ti~~ ·~f.~~~~J
~::: ·:
·i~~~~~i'es
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in·~~~-
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~Iib~i'n~~k~tpla~~;~'~Y-~ilti~e
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'~~ud~ters.:to
.:· '~\~-- .. " -·~ ~

'.
3 lure i~vestois: -in!e_ ~?%fanci '9f~er.,~fhemes in, 'Y,~i9h tfi~.~e .9trrt:~n.ci~~ M~..u~e<;Ltq. fadiiha~e:fr~udll1~nt, :
'
Of siffi.plY,: f~bilc~f6d)i~Y_~~.trri~rit~;.·~~.:~~psacrl~~:S·::::~. :::The r~lease' ~i~~·~ that: )?;e ~~~g,:tnay\iisq ',
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5 involve an·imregi~terec(~'ffe,r~ng .or ti~~ilig ~latfo~;; a~(l:pr_o~se,~, o/''high~ewrn:~f6r g{,tti'hg in ())1 the '
grou~cfrl;6or··~t~. ~rb~in~"r~:~rnet ~h~~:~~hon.;,'9.1· .. ..,... . .. ,, ............. ,,, " .. . .. .. . . ::,
.. 6
': :· ' .: ~ ' .~:: "~:.:'~·' /'::: ::< .. '
7· . 67? ori:Jlliy~'s;;2ou:;~~:~e~,~~i~as:ed,~'·'.l~v~~illi:'l3~n~#r''::~41¢~,~:,,:pi~,l)~i'!~tin.~~at~a ~·
8 til~t digit~)~~09~chaifi
:•
~Wr,eri~ies '"m~y be' secUrit~:e~" ti~qe~ the.fa~ts'ati(i .c{rq~~iru,i2es';:~nd that s~th .:
tq
;~<'• ;-~::••~:.:• H,•:"" " " :,:"':' :~: ':~ :, ,', • ''"' """' '''.'"' "','' ' •

~ ~;{iirtu?l.cqhls. oi::'t61c~ri~~1~: ~ri;'k~Q.a.r~. s.Jlb}~ct ,t/z~j~d'eral:ie~uiiiies' j~~~'s~:i•?~:j•fli~~t:~ib~'~J';bonti~u~:k
lO ·~·pe~iAglrPFt= .,. . .
.11 :::;:,A:virtl.iru.¢j.!rr~ii~)ds a::Cligija,I·repre~entiition•ofvalu~that:c·ru-rbldigiHi.IIY:~hid:~d 'and
... ,. ' . " ', ,, ..as'
.·:':functions ·::;, ·,t'
·.. m edium',......
' ":.·.:.-.. or excl1an'
' ' .. , .: . g_e·?'ullitof account· or'store.ofvaiue:
.. " '. :·.::.· , .. \.' ... ' . :.. '·'. ....... ... "
'Virti.lafto'kens'::•:
. '·' "" ' ,, " '"" ', '' .:·
>9tco~i1~ 111.~Y;:r~Pr~s~Dt<?th,er rigllts as ,\Y'~lJ: :J\:ccord~ngly; in, c~rt~in· qas.e.s;}he tl?_~~~'f::

·_;·•r;:.~;~:~:~~,z~::;:;~~~;i~~~;;:i::i7:~~z;;tttrt~~~itliii:f:,~jri~f~~;ff:;f,'witli::;··
14:
15. ."' 68,.. , ~~~;~~-e·day,:~~ ,~:~S~J~_s,~t~; ~~\~P:~~~ti~~ti,y~:r~Pg~;,£~~c,l~R~.~~.:~~t,1~~:t?J:C~ns issue~. ' "

,>.

~6. b~ a bj~~~chiiri'~~'~i~~~~~f~'i~~~~To_rg~~~~io~-lal~~-;~:~~~~'~fi:·~·:~~~~~i,~:i~sf.;;~~~~~ties. J?e'· '::
17'.press reie~e:~<:>.ii~dng'th'e repog ~tated tllat~,~~iss~ersof distl:lbuted i¢~ger orblock,cJJ~r{t~chnology-: '
18: ·b~~ed.~.f!~,urlH~~:;~;~ ~~~fj~~~-~Jf~fs:~n!,sales:ifs~~;i's~~k~itf~s H~~~;~·;;~~t/{i~~~pt~~lz .#pp!ies" ~d.! _:; '" '' j

:::· . . ~~:.:~ ·- >·~::~~ .:::~~~l :~:;:-- ,:· ·--" .... ~~ .. · -~:~:. .. .. ::;;:i/':·;·. ~:; ::.~;:Y,.. . . ,.. t :
..
19 that thg~,e,: organizing· ~<?gistered offeFin:gs "~ay _be·liable for:vigi~tiog~;:gf the::f~p~r~~ ~~curities : '

2o:: iaws. u 9i:'r~\hd:6~~:~· 6£:fhe ti~~~:~lii:~Ec ·r~tridthat i~en t116ugh ihe:ot~~izatidh i'~Be!ed.its'~~k~ms'as!.
1
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22:. ''.. '.: .. '.,'' . ""·'""· '
,, ·;
90
-'In,vestor.Alett.~ Ponzts~~:zed,.is Using'Virtua!'CurrenCies;:https!I/Wwv.r,se¢,'goVIinvestor!alerts!ia: ~ · ..

~ 3 . •yirtualcu1Tencies.p~f... · . ·· ' ;, ·:-:·':;·:, · ,.·.' ::·;:\1'" ·,: --: ·..
"' ''
24 91' ',:, "
·' Id
25· ?2 ; See :Investor. Bulletin:,:::Jnitial' Coih Offerings";' hrtps://WW\V;se~:~,·.. ov/oiea/investor:.alerts~ani:l-;: '-
26: ·bulletins/ib~~di~i:>f'f~l-iilg~:'~· ...
:2,7, ... 9~ See sicf!ssu~T!nveS.tigatz~~:· Repbri c~~ditcll'ng DA 0 :rokens:itDtgitaliAsset;')ffe~e ·secw:iti~s,~' '
https://w\VW.sec~gov/news/press~release/2017-131,. ·· ·· . " : .. ... . ··"··' ..... · · "

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.;llc·~~~~~~~~~~~~~----~--~'2
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.. COMPLAINT FOR VIOLATIONS OF CALIFORNIA LAW'·' : ·: :. .. .
..
"
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 26 of 30

.·~· 'some~g ptli~t·th~ s~_~uriJ~s,;~e ~ <furrencywa5 su~]ect to ~~·regi§~tiqn ~ui~e~e~ts: ~itlie :\
' ' ' : ' ' .. ' ' : ' .. .
' ' . . ~ ' . " : ' . ' : ,. ' ,, ~' ~~ '; :' ; :

<2 fed~ral se~urlties-lawfas,}n econo~~ §U~st~ce;:it;vas.a.security~ < ·: .. ' '., • •

---3.: ·: . · ·69;,.:::-))n p~~~~r·::Il~: 2ch1, ·sE:c cn~rfuan Jay cia}1()~ (~~da~~~~;rjs$uea::~o$e!. ·
'·;; '• ,,', ·:_::··~<" '~,·,·: ·.·:.:<•> '.'·.·, --:~- . :~: -~~·;,:,:'•>: :'·.,··,,' ~'' ::::v··:::.',':" :\;:,} '~"J.'";-·:·.'.~';•,;->,:·''. ·_.~·_,·. --,:;, ,'>

4· ,Stateme.!lt. on.digital to~~s. ·He:~onfiir_ned. tliat.
•' ' ' 1.~ .·', · • . . ~-·.-.~.
••
"[.•m )ereJy~callirig
~-·:·''
;''" ..... :.·
~ Jql_(en 1;1. ~'!ltility' tok~~ ¢1: 'strocturillg if •.
' ... ·.~.· ·.·~<> ··< .· ::.,"-'.·: ~-·:' < ~· • : · __ : .·~;" •• ,.., ~~.-··· ·.·.~.:

5. to ptoyi~e:~qme' utility does ri()~ prev¢ntth.e to,Cen frorn:being a -~~c~iitjr, ~· aAd .~¢ie~rs~cill1!Y offeiorn'
... ; 6. -~~ ~tt~¢Pts:t~-~-~~~l~yate: io~: o~~r,sub§~c~"' ~~uld p~t gbViate ~he4' obifg~ti~~~;~d~r tli~-f~~~ru :. - ...
1- ~s~c~ti~~;~:~~:;94:_qi~~o~:26~~~ed,~ ~eiti~enrp~: ,,:·:·: "_:,· ·. · '· ::· . .. H' · ·<' ·": ...:··. · .. ":...· · ·

.... .8 ·[cj~riain ~ark~t pro]~ssionaiiitca:ye iittenipteii t~· highlight iituiticl~a'racte~iStics ~i: ··
' :thelrpr_opos~d jn{tia(c:oii(o/J~rings.in: ~n effort to claim th#/thelr p'ropq$~d~okens:: .:.:
..:or' c'oiitS::are ·not'iecurit,ies~ .·Mizny. oj these .aisf!rt.ion~ appet!.r::'to elevf!tefr/ri{{(}r~r·: :''
·::~ubs'taitcii~. :Me~eii: c4I,l!~k:·.~ tofieit ·ll:· ''utility'' toJc.en ·oi~ :struc#iri,g ~~ 'tf!:proViiiff·'
.soin.¢'i(tflitj l(f)es,fzoipre~~nltli'inokenfr(}m (l~iiig.'a s_ecur,itj.: ']?ok(ms an4:offermgs•
11 :·#iat::hicprpprate: i~'atures :·ana. 'tmirketing· efforts: that- eqiphasize the pot~iit!~ 'for: .
:.'profit~ ~as~(on' the; enttt!prem~ui:iai or· manag~tia(efforts\o(others c:9~t1nu_e" t9.
~ ~ontain. th~ halii!u~rl(S·;of ase~ur~ij'¢ider u.s: J~~·. 6n".this ~d: other poiJl~ where·' '
· the,appUc~.ti9n.of:~xp_ertise :andju(.igmen,t is.expected; I believ~ thargate~~ei:iers'fu1d::·
· qthers~ .i.~<5I~ding §e9~ltie{laW)r~rs,:·cicc6iiil'tanfs: ahd ·consuhanti,·;~~ed toi focJ.IS~-i?.h:: ·,
14
\ ilie1i.responsibil~ti~~;':· f.'tli:g~·yo~ ·!&.be ·g;uiae4 hythe;pnnC.i:P~I-~~tivation_:t9r ~hl/,
.registi'Ettion, 'of(~rlrig proc~ss and disclosure ieql#femeilts~)~veStoi:Pr.ot~c\ioP:w#.: 41 ; '
.-:'1 5: ... · .;·:pafticliiar, lli#'p;~ot~ction 9fo.ill:)4~ ~tr~et ~v~stor~, · ·.. :,- . ·' ':.: · : · ·.. · ··· : '·,
•s < • ::· • " ' " " '' ~~ " "' <· ' "" -~ '. ' .. : :·
""

. . ..
' :17 ···' -lM.]a,ny tQ~~n: ()ff~rings ·app~a(~o h~ve gon~:b-~yond ¢.is ~ori~truct:·~ct. are .mo~e.
·. ancJ.ogous Jo .inter~~ts 'in a.ye.t-to:-be~bUilt. publishiri.g :house\yitp: .the auth9t~. b9~kS.::
:• ·:· ,.
18 · :~d ~ii~trib~tio!i:net~orla;:a11 ~~;~()m~. .1,t.is especitz.lly tro_J!hljw/lJ'lien the p~qmo~e_rs '·
jjf: tl~e$e: offe/';,ngs :emp/t/isiie ;t/t{i.'secondary '·miirket tri#!ing':pote~tial :of these:
·::.:./19 .. .:tokens: .:P,~o$p~~'tiye 'purcl{i#ers 'ar~ being sol{t on' _t/te· j}~tential jor)oke_)z{to .
-:'2o . ini;f:eriS¢ in yafuf!:~:.vit~ the ~bii!ty io locfr in those incr~ases by r4se~Jing th_~·'uiken~ ::.
on :a secondal)i niark¢t ~or to "otherwise profitfrom tit~ tokens. "based on the e.t/oris: .
. •2i:
·<
·oi'Qtliers; ::iizes¢.are.key)ialllniu:ks.'OJ asecur.ity.and ase~ll~fiie~ o}f~r{ng. . · ,., .:·
<"22. ;:p);~find.'/ij;g~~-:l~:{(ii;'q~t~i-f~'i:Ol.i~ltlai'~o~n· offerftzg~ tl~~~: iii~~~- s~~n,·~i:~~w~d:.,.
'iizvoiv~: ~~~: 'offer:-:'a.~ir:~ale'" (Ji set;urlties,' 'anct4irect1Jiimpiica'ie :the,::s~~uii,ties' ,,
'23' '; regiStr"aiii}n ·reqil{rei:tzeni~' f!-fid otlzer, fnvesiorprotection provisions_ 'of our fetf.erqi '
.... " .slcltrities.:Linvs/ .G¢nerally spe~ing,, these laws provide tha(inve~tprs.· deserve :to .. ·
.:,:2.4 .' -}a~<hv'':Wh~t,.f4~~·ar¢ll?:yesnng iil-;~4,tlie re~eyririt risks~vof~~(L'. ". . ·.' ' ' '... .. . ..
.··7o~. .\ctiyt~n~
coJld:ii~~e;b~ent~fe~~£directly
' ' ' . . . ' .. . . . . ' . "'
to Ripple.ariel dcifi~d~tSi ~1f~pts'~:toutt4~
;.': :- ';'' :. ; <: )~ ~ <"'. ... • • • • "' '

:'. '26 pro:fit~rit~rig
. '':,. ·..
p~~en~~(":~{i~~e~firig'
. .. .
ill". :Xru>
'
~·..... .
tokens·· on'llie
'
:qp~ .. haii~. while ._dlsClrumirig ~y
. . ' ,'
'-:~.~-~!' ... : ..·..::: :....
-~·· ·~ ·.~· ~

:,-:_:· 27 94
:: :Se~:.J~y:Cl4)1o_n; Sfqteme1it ~n q)ypt~~~rrimcie~ and lniiia? 'cqin 9.ikrtngs; SEC(I)~c·~\l, 201'7)~
·... ·.. " . ....
·.~ .;~ . :" .. . . . .
'·-~:~ . •; . ·.:. . ·, ' ' -~.· ·~.·. ';;' '

. . .... '.' 4- ~ .... ' ...... ' . ''" "
·... · · ,. :·.COMP:LAINT FORVIOLATIONS OF CALIFORNIA LAW ' ·· · .
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 27 of 30

...
-·' "

f }espdrisihilities: td 'c'qgiply:with :applica1Jl~.,s~cur~ties)a'Ys·o.n·the other.":The: SEC h<l:~f sirice I~i.mched
~i qO~t~stig~~i~h~,.~~t~·~~~~~;~;;~~y~t~ps~.::
·4ozens ';;·' .
:::· { . .. ·7~'.: ~~~; 1lhe'.~Ht~~~iji:~~:~~;'b.s::·~e.Guri~~~:'ffial;k¢t's,,:d~f~Ii4ant~Hi4~PIPts,to·,'9jrcfunyent \ .
,
~-

4·, ~~ohaniinv~~t~~:l~,~~~~~a$::1rl~~~:,r~1;:·i,AJ.~ho:~~::c;yi~~curr~i)~i~~;:~~~i~~~:t:;om~thk!i:.or a re~· :
:' 5: inve~ting'ft:ontie~;,th¢.c:Hfi'~dag(( ripg~tt:ue~: ~iif'itlooks Jike ·11 duck; ·swjms. li;k~ ~·du,c.k; .an.d quac:Jcs lik~·a:· ·

, :t:::~~i1r::~~:::i!:~~~~~'~J~~~;~:~v~~:fti~~~lt,~:~~~!~:~:::.
(8' laws.'
.: :.
:''
·:·:·:. :::·.:::".. g·: .· . ,.., ::.: g. ::", .",.:·:·.g ·::· ·:.·. ··:: .. :·. '. ;•, :::•.·::· J>:P:::· .. :·: :·:.::'" ·. ;·. :..

>9 . . n.. IAbight::6f:i~6~ri~!:'sE~ st~~~rij~~~~Ythe~e::c~:'~o~''b{iitil~·:'c16~bt::lli~t:)~RP ·tok,.ens:
•io:· :b6~tituitt:~~cl1rit~~~.:::])esp'ii~;:thi~·:raJ~.~;~g~end~dhav~•taii~ci·t6:~~~i~i¢i:lli6':§~6iliities 'i~:i~~~9rd@ce:
,:{~:. kth ~pp.lib~~~~· tl\0~ ~hii6:~~~~i6:ri~;'b:~~~~~'~ri6~irig;:ah:~ set11~!hli~ril'to .th~· iri~~~~iri~~pubiic; Fu~her,, ..

':t~ ::lto~~~=:~~~:1l:~~.:~~::~~~;~=~~:.:~~tf,'::~~~:J:~ ·
'14 ~fOn~an~:~~~~~tP~]~~~~~;ili~'21~~:~' pury~rs ofjU'as;~f~~~:~~;,fin. .,
d5.< .: · :. .... ..... ,.·: :~.:~~~:~~~::~S,riON ~~EGATI~.~~· ,;;:, -::: ,.,.""'"' '''···' :... , '·'"· :; ..
;16' ::! : 73. Pi~~~tiffbtings'±h~s 'action as'a''class action pursu~t to;§3.82.,.C>fthe Calif(jr~fa Code of · ·
/iJ;. :.civu~:Pr62~d~re''8~;b.~hai.f.~f~''dass''cBfl.s~§##r{of'aii·cii1zen5:·9f¢aiif~~i·~:,~ho:purc;~i~~.d. m:(~e· · ' ·
:·18 : u'cta§~n.:: fm~luded ·~$~ ·t~e:d~~~ .are.d~~~n~~ts. and thi~ raillilie~,-:~~:6·ffi~~~s~"cliteg~~;s ~d affili~~e:~ .
•}
\

19· 'pf ~~-. ~~fed~~~~~. at;;~i~;i;r~i~\r~~\fule~ . i'~~~h~r~::;8i·t4~if" i~~e~iat~/tlHtei:;:~~;~:t~6ir l~g~ ....
.2Q ~re§e~~~~es; :~eirs;<•successors "'' assi~,> an<li 8ny eriti!y. in ~c~ d~ie:lihm~ h~ve oi Ita~ r~
:+ 1· l~o11tr~i~jh~ .im~r~st. . .
;~2,~ :, :· :· . . . h f h 1 . . d f 11 b .·. bl ..
:i ;; : : 74::!;,,' "T., e:me~~e!~.:~FJ::~F::~F.~:~:~:~:?}1~~eroll:S thatJO.Ill.,~,~,p.. :.a ..m.~m e~~:~~}~p~ac~ca e:
..
23· :Hundreds·ofiri'i1Hons of·XRP:h~~e·beensolciby:defendants. While'th~.exact·nimiqer'ofCla5s·h:l~nibers .
·24 ·~~· ~~~·t6 .pi~iWil~ at.thi~:~~~~;~~·d~.hci~:qe ,~~certained fhrdugli ?Ppropri~t~·C1i~·6overy,' p~airiti~ .
'
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25
~~¢liev~sJh~t~hex~ at~;~h6U.~~·d~,b~~6~~~~~\~ t11~~fo;os~d .CJ~ss. ·:·; ,:,:', ,,,., ,,,,:, .. ,. ·'. :, . 1.
.
. ~~~r~ti~s cl.anh~:~~~'~YP.i9al'~;th~daims oft~e flie~ber~:;c>fthe CI~~s;.~s.aifme~bers
'

:26 ; ;: ,: ·:> ·;5;.:
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.. .
~ ~~... ..
'". " " " " ' ' .. . " . " . .
of ' " "' ' " ' ., "~ .. " ' '
,",

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..
2~ th~ class. are .simiikii:;~fiect~d\j~:~defenclfui~i~oiigful
. .. "·.·:
i: .~~ :~~ ;:>~:~ ~:g::-
·~·orid~t{if(~i~I~tion :of federal:·law that i~ ·
28 :~c?mplai~~~(6r here.iti.
.. - 25::.:·

..
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 28 of 30

1 .:· 76< Pl~intiff,W,i_lLfa~rly~J:ld:adequatelypro~ectt~u:~-interes~s.(;)n~t!ll?-~lllb(?r~;~fthe'Class and·· ..
2 h~~- reta!_n.~d C(;)~~el,,~~~;:i~-~d.~~~~~~~~::d:'~~p~~ie~~~~ ,~--~~~~~-:~~~;~~!~~i't~;~,~~~i~~~;61.

:•. :o~er,an::u~~~~J~;1Y~~:~QI~~i:~,~~~7~)b::11h~~~~i~~]~t: .
5 . ·fac.t '~o111IP.o:11. tq:tM:;CI:a~.~::m·~·::,
,.,

;
' {l
': ;~
~h~tl}.er:;4efeJ1~IaJ1t~y~9lat~.d the Corporations :Code;: !

~~ht~~~:~:~I~':sectiriB~s;,,:_ ~J
'

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~

~~et~~~:~-,~~~~:r,~~~t~f~_tQ,'§_r;f~~~:s.~g~~-~~~~:a.~r~~icabi~;;I:~~~~;~-- .... "

(~! wh~ther:plruiitif(iillc:I:the Cla·ss ate;;el!-titled to res.dnq :their purchas~.s ofX!{P; and '~

;~·~!.~;~~!~~·!')~~~ilif;~~~~~m;;,;:;;m~.~~i~~.aiiJ'~proP~
'
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'j! ,:::L~
l { · ;measl_lr~,:\[,d~~ge,~~ "
,.

A' class'i'action:)is :·superior:. 15'>~li, :other<'avhllabitmethodS: ·foi~:th({faif::arid :·effi~i~nt
"

12: 78:, '
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i3 ;adj'~~i~an~2.:~~;~i;!,:~&~M~~~~~!i~~~~i~dihder of,~~~~~is' ifu~,.~~~~ii•. ~~8~r as tti'.. ' '
':j<
14 Clari:lages..s:Uf'fered,by;,individual,Classjnembers ,fiiay be rel~tively small~';the exp_~D;se atjd_,b~den of

: ·::1~i::~:~!~::;~~:::;£::7::::~:;~f~~::;J;~:x·~ng. •
J
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,,
.,

l7· ,FIRST-CAUSE OF-ACTION ...
" ' ':: . . ·,·.~ .. ,",~."~;~;"<:~~~- '" .

,::-F,or,Niol~tion of-'§.§251 lQ' ~nd 25.5.03 ,of the CoFp.9r~tio~s CofJ~';c
'A.g~i~~,!'AII ~~~~~~~nts ·"··
7~;.'i Pl~i#tiffr~pe~ts''apQ'f~~li~g~~'tne·pr~ce(lj_ng ailegafions'as:~f@ly:s~t:f()ith'her¢in.
86? tilli;;~~~~~;9~~~Wti8~::i§;l;~ciri~h~~~~i~iilui~'~b- §§2;'1 JQ.. ~~;~~~'63'',of:fu~:-~6fp:b~~tiofl.~.
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Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 29 of 30

'. : >~
sale h~~"be¢rVquaHfied ... or'\tP.le~'s 'sucii security•:ot:: ti$lsa~tiof(is:'JiX:empted:':oJ.::'p.otsubje6~--t9.
1,f: ~q~~~i~:cf;l:~-~~~~:.Y''::' ·:E·· •'' ·:,:<:- . . ,. , ::-:::: .:.:··:'-' .::::: '':• ":::::: ,.,::·,::-, ·.:; :::<< : :-: ,. . .

s4:~: A~:.s.ugl,l;,Q::glinghguse:aria'rupple h~v~·J;ai-tidp~ted)illlici\iD.iaWilifsate'o.fse~uritie_s.jii
"

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•4 ~iolafl~ni'i~f;;~~.:~~rP~~~tj,Wl~' ~~d~;::and··are\f~bl6Lt~::plaintirr::~a' the d~~:s:for ·rescissi&h:aniDof · . _
;homp~gsai~&;_d~~[g~s. ug~~f,§7?503.
. '! ; ;:·::-~ •.;:~.' ' ...... , ' ""'" ~-~ ·~·;:~:~: ·: ', ::--- '". ''
... ''
·· :;l . ,.: SECOND' CAUSKOKACTION
. :F9t!~iolarlti~i o~:§~SS04 ot:th~ Co~p~ia~iJ~-~'(:·q~de
. .. 'A' 'ainsf:Rf'· h~ and ;Garlin house.
/: 8- ', ,__g ",' -·~:"' '~~-- ' "::'•';,: '"' :~; :.. <::
'"'"" ' .. ' .' !! ~~~ .... :::: '"" ·:· ' ' ' '
9' r sl.i; Plai.~tiffrepea1~- ap,~..r~~lege_s 'the,p~ecedi11g_aifegat~ons: 'as'iffuily:'set'f6rtg JJ.etein.
,;;o, :, ·'····'·'·· 86f: ~!@~~~~·~~i~~:j~,grf~~.~p~~~\i~ '§z~~2~;,~r,,~~.go~~~~;t:~e:~ajngt ·
:11 Ripple~and,G:arlirighous:t;~',~j --
·::·~; .. ,~~,: ~:... ~ ... ~:.·.·~ ..... ~

"q> :: . :~:, 87:·
p~e. t9:11~s.::~9s.i#_o~mthiii:t~::Go~pfilly a#d rqle.. ,ji:s~a.~yj~; tlj~-~,·~edgei;·<nvnership,
_;p; :ihfere~t:in,~g -~oii'tl;_ofpver::fupple;;QaJ:liiighous~. ac,~~Was •a, c,oritroll.mgpc:rsoir'ofRippJe and-~ II·

'J'4' lkthi~ the'~~hll!ng:~t'§2'5s'd~_:of:th{borporatlons:~~aea~-~ii~'ged h~~~~~:;;:~·y\drttie·~i:~~:~!JX)~Htioil as . . .,

·-i~: · ~~o:'im&his'· ·anici~ation::in;~wor;~waren¢ss·'~fRf _re~s.'oi-~ration:~.::darlinghouse.:B~d:~jt~ o~~r to:
:;~: t:1~1~!~t4~i~1~~~~~i~±:~~~r\y·Qf~g~y;:~.~~~~~;~~:te~g, ·
18': , :ii:--·"· -'~ippi~-~9~li61j~a:)ffipj!L~k·;~-par~nfofXBJ>:II, agd'th~ -y~dii~. ~ctri~~ ~spo~~ible:for ·
1~- -J~e .a<iv~ce~ew_s,f:~~~}~~:.e~qsyst~lll·'Hif~;:~~dition.H~p~l:~.:~~-~~glJ~~-Q~~i~#~~P~~?¥¥;~ii, ofhis, ::
. .. -·::20 -~~pl~ye~~:

~ ·~~:~l:elr~~§;re5~~~~~;~:2!{~==:~:;·
"

24. -~ilier~ihhlb~~i~A~i:~iisnffa1:!~ileg~:d'W~~e~.::'~~:t~~;'~fthe1r. d~-~cti,-ad~;~ei~;~os~iions'·of'cori~ol
25 ~d ~~~~i. ~~~~'~d:oiii;;g~~~]~ mat,rialiY ~~,in th~ 11fls;~~ l'!'!JS;;i~~~:Prmtifu~g:the
26 _viola~o~s,'~.l~:eged h~~~frl~ ...
27. .. ':; '96} Byy_kfu~ ofthc:for~g!)_iJ,lg, ci~fegdants are-liable.to plain1iffand the Class as second~ry ·
·a~~pr~_up.d~f!'§2,_~;~41:9'hh~i·¢~~o-~a~ion~'i@6~~·~:: ... _, .:
·'
28- ..
' :.. 2 .. ~-- ' - ':''': ' ::: : ·: ''
:'.::-<:-..COMPLAINT FQRVIOLATIONS OF CALIFORNIA LI\__W
Case 4:18-cv-04790-PJH Document 15-5 Filed 09/07/18 Page 30 of 30

''
,,

·· ;:::·91'.' ·'::;;:J\·ssuch"Dilr!iri' 'h8lis~atia:Ri Ie.have' 'artici ·a1:ed iit:aldime istere'cfsaleofsecurh:ies
1. .·' ,., ·:::~:;:L·::;::.:: .. "' ;;;~;.,:;;;;.E:~;;;_ !;'\~::, r~ ···:::<<,.:~· ". P:.:: ,,;:;;·:;;~;;;,:,:::::::·:~---:·::·::;;~;; :::.·:::;;·.::. ,. ::.: ..
·2 'in vigl~~iog :qfthe::Cq!poratioris· Code; cllJ,d. an~ liabl~::to -P~liintiff and:th'f:':Class:Jaf·reseission a!ldlox
~F~----: .. --~, ,~ n~ -~~~;: ~F;~~~;:;:;~:~·r~~·:· ... ·-~;:::<~~:;:;:~<: ... ·: ; •' :
3 ' '"""'"'""'\!an:l.fig~~~:
compe,,J,l.~~t<:>~Y,,:,. "'"""''"

::~~YER'F~.~::JlELIEF:},.
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. l
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:)
1

' .....
9 ·~ppli?~bl~;1aw; ..
·1o Awardiff':Ocom .. ens·ator'' :·aama· es ·in Javor::of"'laintifftancflli~Ft)'tii~t"Class :memb~i~ '· d
..::' .. c~:tH· ... · · g.. · P. · }~ •. - ·· g ..... ::·: ···· · .. · ·i;i ·· · ::;;:(;:;~;;;:::~~:_:'~;;,:: .. ::. ·.: .. · · ·:::: :": ,
--·:t · ·
;,

)l against ::ali"de(endan,t~~;;j9~11tlx· 5li.J:d':~evera11y,..for :_all. ·;¢~ages: ~1,1sfamc:d:: as":i'resulf'of'defendlilits'

; .· :~::d::::!~~!!E';~l~!§i~1~if~~~~~~~::~~··mcoooo:.ih ~~.·
:{5: <' E. A~~dk~;~~scissi~~Ho~;~,~~~Cii3sionat :rneasure··afdamir es'·'and ..
"''"· AIJi~~i'~~~~;;~&ilii~JQi;\j~~~~~:·i;·~~~:~;;~f";~~~·@illi.rt.mayge,rn j~~t. !!1~. ,·
",, """ ""'"
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:(?Y~Y-'~Jl:~fi '·
Plamtif6~{~btfulf''f~'''u~kis J ,,Y on· all issues·s·O.triabl~::,
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"
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"'
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 1 of 16

 

 

 

EXHIBIT D
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 2 of 16

1 ROBBINS ARROYO LLP
BRIAN J. ROBBINS (190264)
2 STEPHEN J. ODDO (174828)
ERIC M. CARRINO (310765) 8/31/2018
3 600 B Street, Suite 1900
San Diego, CA 92101
4 Telephone: (619) 525-3990
Facsimile: (619) 525-3991
5 E-mail: brobbins@robbinsarroyo.com
soddo@robbinsarroyo.com
6 ecarrino@robbinsarroyo.com
7 Co-Lead Counsel for Plaintiffs

8 [Additional counsel appear on signature page]
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA

10 COUNTY OF SAN MATEO
11 IN RE RIPPLE LABS INC. LITIGATION ) Lead Case No. 18-CIV-02845
)
12 ) (Consolidated with Case No. 18-CIV-03332)
This Document Relates To: )
13 ) CLASS ACTION
ALL ACTIONS. )
14 ) NOTICE OF ENTRY OF ORDER
)
15 ) Judge: Hon. Richard H. DuBois
) Dept: 16
16 ) Date Action Filed: June 5, 2018
17

18

19

20

21

22

23

24

25

26

27

28

NOTICE OF ENTRY OF ORDER
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 3 of 16

1 TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

2 PLEASE TAKE NOTICE that on August 30, 2018, the Court entered the

3 Stipulation and Order Consolidating Related Actions and Related Matters, a true and correct

4 copy of which is attached hereto as Exhibit A.

5 DATED: August 31, 2018 ROBBINS ARROYO LLP
BRIAN J. ROBBINS
6 STEPHEN J. ODDO
ERIC M. CARRINO
7

8
STEPHEN J. ODDO
9
600 B Street, Suite 1900
10 San Diego, CA 92101
Telephone: (619) 525-3990
11 Facsimile: (619) 525-3991
E-mail: brobbins@robbinsarroyo.com
12 soddo@robbinsarroyo.com
ecarrino@robbinsarroyo.com
13
ROBBINS GELLER RUDMAN
14 & DOWD LLP
DAVID C. WALTON (167268)
15 BRIAN E. COCHRAN (286202)
655 West Broadway, Suite 1900
16 San Diego, CA 92101
Telephone: (619) 231-1058
17 Facsimile: (619) 231-7423
E-mail: davew@rgrdlaw.com
18 bomara@rgrdlaw.com
bcochran@rgrdlaw.com
19
Co-Lead Counsel for Plaintiffs
20
SHAWN A. WILLIAMS (213113)
21 Post Montgomery Center
One Montgomery Street, Suite 1800
22 San Francisco, CA 94104
Telephone: (415) 288-4545
23 Facsimile: (415) 288-4534
E-mail: shawnw@rgrdlaw.com
24
Additional counsel for Plaintiff Vladi Zakinov
25

26
1292660
27

28
-1-
NOTICE OF ENTRY OF ORDER
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 4 of 16

1 DECLARATION OF SERVICE

2 I, the undersigned, declare:

3 1. That declarant is and was, at all times herein mentioned, a citizen of the United

4 States and a resident of the County of San Diego, over the age of 18 years, and not a party to or

5 interest in the within action; that declarant's business address is 600 B Street, Suite 1900, San

6 Diego, California 92101.

7 2. That on August 31, 2018, I served the following document(s):

8 NOTICE OF ENTRY OF ORDER
9 By transmitting via facsimile the document(s) listed above to the fax
number(s) set forth on the attached Service List from fax number (619) 525-
10 3991 on this date before 5:00 p.m. The facsimile transmission was reported as
complete and without error.
11
X By placing the document(s) listed above in a United States mailbox at San
12 Diego, California in a sealed envelope with postage thereon fully prepaid and
addressed to the parties listed on the attached Service List.
13
By causing the document(s) listed above to be served by a courier service on
14 the following parties:
15 By depositing in a box or other facility regularly maintained by UPS, an
express service carrier, or delivered to a courier or driver authorized by said
16 express service carrier to receive documents, in an envelope designated by the
said express service carrier, with delivery fees paid or provided for, addressed
17 to the parties on the attached Service List.
18 Based on a court order or an agreement of the parties to accept service by e-
mail or electronic transmission, I sent the documents described herein to the
19 persons at the e-mail addresses on the attached service list. I did not receive,
within a reasonable time after the transmission, any electronic message or
20 other indication that the transmission was unsuccessful.
21
3. That there is a regular communication by mail between the place of mailing and
22
the places so addressed.
23
I declare under penalty of perjury under the laws of the State of California that the
24
foregoing is true and correct. Executed this August 31, 2018, at San Diego, California.
25

26

27 KATHERINE B. SCHEELE

28
-2-
NOTICE OF ENTRY OF ORDER
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 5 of 16
In re Ripple Labs Inc. Litigation, Lead Case No. 18CIV02845

COUNSEL FOR PLAINTIFFS

Brian J. Robbins Shawn A. Williams
Stephen J. Oddo ROBBINS GELLER RUDMAN
Eric M. Carrino & DOWD LLP
ROBBINS ARROYO LLP Post Montgomery Center
600 B Street, Suite 1900 One Montgomery Street, Suite 1800
San Diego, CA 92101 San Francisco, CA 94104
Telephone: (619) 525-3990 Telephone: (415) 288-4545
Facsimile: (619) 525-3991 Facsimile: (415) 288-4534
E-mail: brobbins@robbinsarroyo.com E-mail: shawnw@rgrdlaw.com
soddo@robbinsarroyo.com
ecarrino@robbinsarroyo.com Co-Lead Counsel for Plaintiffs

COUNSEL FOR DEFENDANTS
Peter B. Morrison John Neukom
Virginia F. Milstead SKADDEN, ARPS, SLATE, MEAGHER
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
& FLOM LLP 525 University Avenue, Suite 1400
300 South Grand Avenue, Suite 3400 Palo Alto, CA 94301
Los Angeles, CA 90071 Telephone: (650) 470-4500
Telephone: (213) 687-5000 Facsimile: (650) 470-4570
Facsimile: (213) 687-5600 Email: john.neukom@skadden.com
Email: peter.morrison@skadden.com
virginia.milstead@skadden.com Mary Jo White
Andrew J. Ceresney
DEBEVOISE & PLIMPTON LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Email: mjwhite@debevoise.com
aceresney@debevoise.com

Counsel for defendants Ripple Labs Inc., XRP
II, LLC, and Bradley Garlinghouse

1292662
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 6 of 16

EXHIBIT A
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 7 of 16

b-A
ROBBINS ARROYO LLP
BRIAN J. ROBBINS (190264)
STEPHEN J. ODDO (174828)
ERIC M. CARRINO (310765)

1
600 B Street, Suite 1900
San Diego, CA 92101
FILED
SAN MATEO COUNI'
Telephone: (619) 525—3990
'

Facsimile: (619) 525-3991
AUG 201
'E—mail: brobbins@robbinsarroyo.com 39
\OOOQONU‘I-PUJN soddo@robbinsarroyo.com
ecarr1no@robbinsarroyo.com
I”!
Attorneys for Plaintiffs 3)-
Vladi Zakinov and David Oconer
W
k:
[Additional counsel appear on signature page] [w
n:
%
SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN MATEO
\
VLADI ZAKINOV, Individually and on Case No. l8-CIV-0284S
Behalf of All Others Similarly Situated,
CLASS ACTION
Plaintiff,
STIPULATION AND [PROPOSED]
v, ORDER CONSOLIDATING RELATED
ACTIONS AND RELATED MATTERS
RIPPLE LABS INC., XRP II, LLC,
BRADLEY GARLINGHOUSE, and DOES
1—25, Inclusive, Judge: Richard H. DuBois
NNNMNNNMNHb—db—lD—lb—li—lb—lh—‘D—‘H

Dept: 16
Defendants. Date Action Filed: June 5, 2018
OOflQM-PWNHOKOOONO‘sUl-bkflND—‘O

VVVVVVVVVVVVVVVVVVVVVVVVVVV


DAVID OCONER, Individually and on Case No. 18-CIV-03332
Behalf of All Others Similarly Situated,

Plaintiff, 153—
(1111—02845
l

Isiipulation 81 Order
v. ‘.

INC, XRP II, LLC,
RIPPLE LABS
BRADLEY GARLINGHOUSE, and DOES \l\\\\ll\\\\\\\\\\\\\l\\\\l\\\\\\\\\
1-25, Inclusive, \fa-r‘
Judgez:RObert D. Foiles

Defendants. Dept: 21 -.

Date Action Filed: .Iune. 27, 20l 8:.
., \:4
1%

STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS'& RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 8 of 16

”%J%%s
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I


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I
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 9 of 16

1. The above-captioned actions pending in this Court (the "Related Actions") make

substantially the same allegations against defendant Ripple Labs Inc. ("Ripple" or the

AWN ;”Company"), XRP II, LLC, and Bradley Garlinghouse.
,

2. In an effort to assure consistent rulings and decisions and the avoidance of

unnecessary duplication of effort, counsel for the respective parties in the Related Actions

hereby enter into this Stipulation and [Proposed] Order Consolidating Related Actions and 1,

Related Matters (the "Stipulation").
\DOOxlChL/t

3. Counsel for the parties to this Stipulation include Robbins Arroyo LLP 1

' ("Robbins Arroyo") and Robbins Geller Rudman & Dowd LLP ("Robbins Geller") On behalf of

10 plaintiff Vladi Zakinov; Robbins Arroyo on behalf of David Oconer (collectively, "Plaintiffs"); .

‘7
11 'Skadden, Alps, Slate, Meagher & Flom LLP and Debevoise & Plimpton LLP on behalf of
12 defendants Ripple Labs, Inc., XRP II, LLC, and Bradley Garlinghouse (collectively,

13
'
"Defendants").
I

14 4. The parties agree that it would be duplicative and wasteful of the Court's

15 resources for Defendants named in the Related Actions to have to respond to the individual

16 complaints prior to the agreed upon consolidation and in light of the anticipated filing of a _

17 consolidated complaint. Therefore, the parties agree that Defendants need not respond to the

18 individual complaints that have already been filed in this Court.
19 5. On August 8, 2018, the Zakinov action was designated as complex. On August

20 21, 2018, it was assigned to the Honorable Richard H. DuBois, Department 16, for all purposes.
21 A complex case status conference in the Oconer action is set for August 29, 2018.
22 4
CONSOLIDATION
23 6. The following Related Actions are hereby consolidated for all purposes,

24 including pre-trial proceedings and trial (the "Consolidated Action"):

25 Abbreviated Case Name Case Number Date Filed
26 Zakinov v. Ripple Labs Inc. 18-CIV—02845 6/5/2018
27 Oconer v. Ripple Labs Inc. lS-CIV-O3332 6/27/2018

28
1- 1 _

STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS & RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 10 of 16

H Every pleading filed in the Consolidated Action, or in any separate action included herein, shall

N bear the following caption:

L93
SUPERIOR COURT OF THE STATE OF CALIFORNIA
4}
COUNTY OF SAN MATEO
U1

IN RE RIPPLE LABS INC. LITIGATION T)
Lead Case No. 18-CIV-02845
0\

{This Document Relates To:
- —

i (Consolidated with Case No. 18-CIV-03332)
”‘1,

g CLASS ACTION
“’3

GO
ALL ACTIONS.
)
,.)
KO

.

7. The files of the Consolidated Action shall be maintained in one file under Master
I--\
O

File No. 18-ClV—02845.
H H

8. Plaintiffs shall either designate a complaint as operative or file a Consolidated
H N
Complaint ("Consolidated Complaint") within 45 days after entry of this order, unless otherwise
)--x b)

b—A
4}
agreed upon by the parties. If filed, the Consolidated Complaint shall be the operative

complaint and shall supersede all complaints filed in any of the actions consolidated herein.
r—-\
(J!

Defendants shall respond to the operative complaint or Consolidated Complaint within 45 days .

)—-t O\

after service, unless otherwise agreed by the parties. In the event that Defendants file any
)-‘ \l

motions directed at the operative complaint or Consolidated Complaint, the opposition and
)-‘ 00

3

Ereply briefs shall be filed within 45 and 20 days, respectively, of the motions, unless otherwise
i—d
\D

agreed upon by the parties. Counsel agrees to confer to select a hearing date.
NO
APPOINTMENT OF A LEADERSHIP STRUCTURE
NH

9. The Plaintiffs agree that Robbins Arroyo and Robbins Geller shall serve as Co-
[\J N

Lead Counsel for Plaintiffs ("Co-Lead Counsel") in the Consolidated Action, and Defendants
N U) i

take no position on the Court's appointment of Co—Lead Counsel for Plaintiffs or the
NA
.
responsibilities assumed by that Co—Lead Counsel.
[\J U!

10. Plaintiffs agree that Co—Lead Counsel shall have sole authority to speak for ,

N O\
Plaintiffs in matters regarding pro-trial procedure, trial, and settlement and shall make all work '

[\J \I

N 00

-2-‘
STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS & RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 11 of 16

assignments in such manner as to facilitate the orderly and efficient prosecution of the .

Consolidated Action and to avoid duplicative or unproductive effort.
U)
11. Plaintiffs agree that CO-Lead Counsel shall be responsible for coordinating all ‘

activities and appearances on behalf of Plaintiffs. No motion, request for discovery, or other i

pre—trial or trial proceedings shall be initiated or filed by any Plaintiff except through Co-Lead

\OOOQO'xU‘s-P
Counsel.

12. Plaintiffs agree that Co—Lead Counsel shall be available and responsible for ‘,
'
communications to and from this Court, including distributing orders and other directions from-

the Court to counsel, and shall be reSponsible for communication with Defendants' counsel on

10 matters of case administration and scheduling. Co—Lead Counsel shall further be responsible for:

ll creating and maintaining a master service list of all parties and their respective counsel.

12 13. Defendants' counsel may rely upon all agreements made with Co—Lead Counsel, '3

or other duly authorized representative of Co—Lead Counsel, and such agreements shall be
:

13

14 binding on all Plaintiffs.
15' RELATED MATTERS
16 14. This Order shall apply to each case, arising out of the same or similar;
'

17 transactions and/or events as the Related Actions which is currently pending in, subsequently

18‘; filed in, remanded to, or transferred to this Court.
19; 15. When a case which properly belongs as part of the In re Ripple Labs Inc.

Litigation, Lead Case No. 18-CIV-02845, is hereafter or has been filed in, remanded to, or
21 transferred to this Court, counsel for the parties shall call such filing, remand, or transfer to the :

22: attention of the clerk of this Court for purposes of moving the Court for an order consolidating
23' such case(s) with In re Ripple Labs Inc. Litigation, Lead Case No. 18—CIV—0284S. Counsel for
24' the parties will further assist in assuring that counsel for the parties in such subsequent
action(s)

25 receive notice of this Order.

26:

27.
'

28


-3- ‘
'STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS &RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 12 of 16

'
IT IS SO STIPULATBD.

DATED: (8/22/1 ? ROBBINS ARROYO LLP
BRIAN J. ROBBINS
STEPHEN J. QDDO
ERIC M.. CA INO

\lO’xUl-bUJN

‘ '

(’ S 'EPiIbNTODDO
'

600 B Smelt\ Bite/51900
San Diego (3" 2101
Telephone. (619) 525- 3990
Facsimile. (619) 525- 3991
E-mail: brobbins@robbinsarroyo.com
soddo@robbinsarroyo.com
ecarrino@robbinsarroyo.com
10
Proposed Co-Lead Counsel for Plaintiffs and
11
Counsel for Plaintiffs Vladi Zakinov and
David Oconer
12
DATED: {9/7’3/ 1 g ROBBINS GELLER RUDMAN
13) .

& DOWD LLP
14

15 §
BRIAN o, osMAgA (229737)
'.

16
DAVID C. WALTON (167268)
17
BRIAN E. COCHRAN (286202)
655 West Broadway, Suite 1900
18' San Diego, CA 92101
Telephone: (619) 231-1058
Facsimile: (619) 23 1-7423
19
E—mail: davew@rgrdlaw.com
20 bomara@rgrdlaw.com
bcochran@rgrdlaw.com
21
Pr0posed Co—Lead Counsel for Plaintiffs and
' Counsel for Plaintiff Vladi Zakinov
22

23 .
SHAWN A. WILLIAMS (2131 13)
Post Montgomery Center
One Montgomery Street, Suite 1800
24" San Francisco, CA 94104
Telephone: (415) 288-4545
25
Facsimile: (415) 288-4534
E-mail: shawnw@rgrdlaw.com
26f
27
Additional counsel for Plaintiff Vladi Zakinov

28
-4-
STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS & RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 13 of 16

:

DATED: 3134/ I g SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
N

la)
How/f ”7cm”
PETERB MORRISON
‘A
Peter B. Morrison
Virginia F. Milstead
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
\ooeqmu:
Telephone: (213) 687-5000
Facsimile: (213) 687-5600
Email: petermorrison@skadden.com
Virginia.milstead@skadden.com

John Neukom
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
525 University Avenue, Suite 1400
Palo Alto, CA 94301
Telephone: (650) 470—4500
Facsimile: (650) 470-4570
Email: john.neukom@skadden.com

Mary Jo White (pro hac vice forthcoming)
Andrew J. Ceresney (pro hac vice
forthcoming)
DEBEVOISE & PLIMPTON LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 909—6000
Facsimile: (212) 909-6836
Email: mjwhite@debevoise.com
aceresney@debevoise.com
'

Counsel for defendants Ripple Labs Inc., XRP
II, LLC, and Bradley Garlinghouse

w

, 111286406

-5-
STI'PULATION‘ & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS '& RELATED MATTERS ,
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 14 of 16

ORDER
)—-l

The above Stipulation Consolidating Related Actions and Related Matters having been

considered, and good cause appearing therefore,

IT IS SO ORDERED.

\OOOVQUI-BUJN
DATED: 5/] 7‘ , / 3’ HONORABLE‘RICHARD H; DUBOIS’
JUDGE OF THE SUPERIOR COURT

MMMNNNNNNHr—awr—Ap—Ir—A—t—ay—AH

Wumm-P‘J-‘Nb‘OOOOQO’xUI-h-WNHO

—6-
STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTIONS & RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 15 of 16

DECLARATION OF SERVICE
I, the undersigned, declare:
'

1. That declarant is and was, at all times herein mentioned, a citizen of the United
'

States and a resident of the County of San Diego, over the age of 18 years, and not a party to or

interest in the within action; that declarant's business address is 600 B Street, Suite 1900, San

Diego, California 92101.
\OOOQO‘tUl-b

A

2. That on August 23, 2018, I served the following document(s):

STIPULATION AND [PRUPOSED] ORDER CONSOLIDATIN G RELATED
ACTIONS AND RELATED MATTERS

By transmitting via facsimile the document(s) listed above to the fax
10 number(s) set forth on the attached Service List from fax number (619) 525-
3991 on this date before 5:00 pm. The facsimile transmission was reported as
ll complete and without error.
12'
.lN By placing the docurnent(s) listed above in a United States mailbox at San
Diego, California In a sealed envelope with postage thereon fiilly prepaid and
13 addressed to the parties listed on the attached Service List.
14E
By causing the document(s) listed above to be served by a courier service on
the following parties:
15%

16
By depositing in a box or other facility regularly maintained by UPS, an
express service cairier, or delivered to a courier or driver authorized by said
express service carrier to receive documents, in an envelope designated by the
17
said express service carrier, with delivery fees paid or provided for, addressed
to the parties on the attached Service List.
18
Based on a court order or an agreement of the parties to accept service by e~
191‘;
mail or electronic transmission, I sent the documents described herein to the
persons at the e—mail addresses on the attached service list. I did not receive,
203:
1
within a reasonable time after the transmission, any electronic message or
other indication that the transmission was unsuccessful.
21

22'
3. That there is a regular communication by mail between the place of mailing and
23 ,
the places so addressed.

24 g I declare under penalty of perjury under the laws of the State of California that the
"
25:”foregoing is true and correct. Executed this August 23, 2018,

at San D13
26‘

27.. KA THERINE B. SCHEELE
28 ,

-7-
STIPULATION & [PROPOSED] ORDER CONSOLIDATING RELATED ACTTONS & RELATED MATTERS
Case 4:18-cv-04790-PJH Document 15-6 Filed 09/07/18 Page 16 of 16

Zakinov v. Ripple Labs Inc., et al., Case No. 18CIV02845;
0coner v. Ripple Labs Inc., et (11., Case No. 18CIV03332

COUNSEL FOR PLAINTIFF S

Brian J. Robbins Shawn A. Williams
Stephen J. Oddo ROBBINS GELLER RUDMAN
Eric M. Carrino & DOWD LLP
ROBBINS ARROYO LLP Post Montgomery Center
600 B Street, Suite 1900 One Montgomery Street, Suite 1800
San Diego, CA 92101 San Francisco, CA 94104
Telephone: (619) 525—3990 Telephone: (415) 288—4545
Facsimile: (619) 525—3991 Facsimile: (415) 288-4534
E—mail: brobbins@robbinsarroyo.com E—mail: shawnw@rgrdlaw.com
soddo@robbinsarroyo.com
ecarrino@robbinsarroyo.com David C. Walton
Brian 0. O'Mara
Counsel for Plaintififs Vladi Zakinov and David Brian E. Cochran
Oconer 655 West Broadway, Suite 1900
San Diego, CA 92101
Telephone: (619) 231-1058
Facsimile: (619) 23 1—7423
E-mail: davew@rgrdlaw.com
bomara@rgrdlaw.com
bcochran@rgrdlaw.com

Counsel for Plaintiff Vladi Zakinov

COUNSEL FOR DEFENDAN TS

Peter B. Morrison John Neukom
Virginia F. Milstead SKADDEN, ARPS, SLATE, MEAGHER
SKADDEN, ARPS, SLATE, MEAGHER & F LOM LLP
& FLOM LLP 525 University Avenue, Suite 1400
300 South Grand Avenue, Suite 3400 Palo Alto, CA 94301
Los Angeles, CA 90071 Telephone: (650) 470—4500
Telephone: (213) 687—5000 Facsimile: (650) 470-4570
Facsimile: (213) 687-5600 Email: john.neukom@skadden.com
Email: peter.monison@skadden.com
Virginia.milstead@skadden.com Mary J 0 White
Andrew J. Ceresney
DEBEVOISE & PLIMPTON LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Email: mjwhite@debevoise.com
aceresney@debevoise.com

Counsel for defendants Ripple Labs Inc., XRP
II, LLC, and Bradley Garlinghouse

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