Ripple Faced With Another Suit Claiming XRP Is A Security
Once again, another securities fraud lawsuit has been slapped against Ripple in California. In the recent suit, the lead plaintiff, David Oconer is planning to have the XRP cryptocurrency categorized as a security.
The case filed in California’s Superior Court sitting in San Mateo County and has termed Ripple Labs, its chief executive officer, Brad Garlinghouse, and XRP II LLC, a money service business unit of Ripple Labs as defendants.
Based on the lawsuit, the way XRP cryptocurrency is operated and shared by Ripple Labs including how the coin is conflated with the company’s product offerings makes XRP a security. Therefore, the suit states that the company has as a result gone against securities laws by selling it.
According to the suit, in May 2017, the company confirmed that the distribution of 61.68 billion XRP that Ripple owned would be restricted, with the company placing 55 billion XRP in an escrow account. Based on the lawsuit, executives at Ripple, as well as the CEO, were active in supporting this fact with a view of increasing the price.
The lawsuit went further to state that, by restricting supply, it was able to reach the intended effect.
“Ripple’s public commitment to limit the supply of XRP had its intended effect. In the weeks that followed, the price of XRP rapidly increased, from approximately $0.22 per token on December 7, 2017, to $3.38 per token on January 7, 2018,” the complaint reads.
The is the third time Ripple is faced with a class-action lawsuit. In June, a suit was filed by Vladi Zakinov, also in California’s Superior Court in San Mateo County, claiming that XRP is a security under the management of Ripple Labs.
Zakinov claimed Ripple should have registered XRP before selling it, even though this never occurred. Furthermore, the lawsuit claimed that improper statements were used by the firm and its executives and this had the effect of increasing XRP’s price.
Another lawsuit was filed in May with similar allegations of going against securities regulations were put forward. Ryan Coffey, the lead plaintiff in the case noted, Ripple Labs and other defendants had gained significantly by participating in a “never-ending initial coin offering.” The lawsuit also accused Ripple Labs of depicting the XRP cryptocurrency as a good investment, including spreading hopeful price predictions.