New class-action lawsuit against Ripple (XRP) filed in Florida ๐จ This article is 4 years old...
New class-action lawsuit against Ripple (XRP) filed in Florida
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Updated: Jan. 27, 2021 at 1:13 pm UTC
Florida resident Tyler Toomey has filed a class-action lawsuit against Ripple Labs, the blockchain-focused firm behind XRP cryptocurrency, alleging that the company violated the stateโs securities laws by selling its tokens.
This comes on the heels of the Securities and Exchange Commission (SEC) filing a $1.3 billion lawsuit against Ripple with similar allegations.
โThis is a class action lawsuit regarding Defendantsโ sale of XRP cryptocurrency tokens to Florida residents in violation of Florida securities laws. Specifically, Defendants sold millions of dollars (or more) of XRP tokens, which are securities under Florida law, to Florida investors without registering the same either with federal or Florida authorities,โ stated the latest filing.
No restrictions on XRP reselling
Per the document filed on January 25, Ripple did not impose any restrictions on reselling of XRP and allegedly โexpected that most, if not all, institutional buyers would sell their XRP into public markets.โ Simultaneously, the company actively tried to protect XRPโs trading price, Toomey noted.
โBy selling [to institutional investors] at discounts to market prices, Ripple incentivized these buyers to seek to sell their XRP into the public markets in order to realize what was essentially a guaranteed profit,โ the document added.
Ripple CEO Brad Garlinghouse is also featured in the lawsuit as an individual defendant, alleging that Garlinghouse sold around $150 million worth of XRP between 2017โ2019 and took part in manipulating the tokenโs price.
โAt various times between April 2017 and at least December 2019, Garlinghouse also paused his XRP sales because XRPโs market price was falling, seeking to avoid driving down XRPโs market price,โ the plaintiff added.
Ripple sold XRP sale to cover its expenses
Apart from trying โto bolster XRP as an investment vehicle,โ the lawsuit also alleged that Ripple had been selling its tokens โas widely as possibleโ to actually cover its operating expenses.
โThe overwhelming majority of Rippleโs revenue came from its sales of XRP (over $1 billion), and Ripple relied on those sales to fund its operations,โ Toomey asserted, adding, โRippleโs sales of XRP have allowed it to meet its ballooning expenses. […] While Rippleโs expenses continued to increase (reaching nearly $275 million for 2018), its revenue outside of XRP sales did not.โ
In conclusion, Toomey asked the court to order Ripple to โdisgorge all ill-gotten gainsโ and pay a civil money penalty as well as prohibit the company from participating in any further offerings of digital asset securities.
As CryptoSlate reported, the SEC filed a somewhat similar lawsuit in late December, accusing Ripple of token manipulation, unlicensed securities sale, paying to get listed on crypto exchanges, and paying for โfakeโ partnerships.
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Liam Frost
Liam Frost is a freelance journalist and editor with over 15 years of experience working for various media outlets across the world.
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Theย XRP Ledgerย is a decentralized cryptographic ledger powered by a network of peer-to-peer servers.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Brad Garlinghouse stands at the forefront of financial technology as the CEO of Ripple.
