Ripple Was Sued Due to Alleged US Security Law Violations
Lawsuit Was Filed
The Class Action Lawsuit
Ryan Coffey who is a resident at San Diego filed the class action lawsuit against the whole subsidiary XRP II LLC, the Ripple Labs Inc. and also Bradley Garlinghouse who is the CEO in Ripple and also other ten people who are related to the organization. Therefore, Attorney James Taylor-Copeland who is representing Coffey was involved in the filing of a lawsuit with the California state superior court. He was, therefore, seeking the various damages Coffey accrued and also other people in a similar situation.
According to a court document which was dated May 3, Coffey was involved in the purchase of 650 XRP at $2.60 per one token in January and then sold the tokens at a price of $1.7 per one token in 18th January.
Coffey made a description;
[The lawsuit] arises out of a scheme by defendants to raise hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws.
XRP Beginning of the Never-Ending ICO
In the filing, Coffey indicated, “unlike cryptocurrencies such as bitcoin and Ethereum…all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013.”
He, therefore, cited that the various tokens were taken by the Ripple Labs founders and also around 80 billion was taken by the organization.
From 2013 to the present, [the] defendants have been engaged in an ongoing scheme to sell XRP to the general public in a never-ending ICO…Defendants’ sales of XRP to the public accelerated rapidly in 2017 and early 2018.
Coffey, therefore, made an allege that the defendants are involved in the marketing of XRP to drive the demand and improve the price which includes the diminishing of the Ripple Labs Enterprise solutions and XRP differences.
Security Law Violation
While citing that the Securities and Exchange Commission (SEC) made t very clear that the XRP digital tokens include “securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration,”
Coffey further elaborated;
The XRP offered and sold by [the] defendants have all the traditional hallmarks of a security…However, [the] defendants did not register XRP with the SEC, and many of the representations [the] defendants made regarding XRP were designed to drive demand of XRP, allowing defendants to obtain greater returns on their XRP sales.
SEC last month said that Ether and XRP could be classified as securities. Additionally, Cory Johnson said to the CNBC;
We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.