Another Lawsuit Filed Against Ripple for XRP’s Classification

Jul 06, 2018 at 20:29

Ripple, the blockchain platform which is tied to XRP, the third largest cryptocurrency based on market cap, is facing another class suit due to the latter’s continuing legal dilemma on its right classification.

The lawsuit filed by California resident, David Oconer in the Superior Court of California, argued that Ripple “created the XRP token and then used sales of the tokens in order to fund its operations and the development of the XRP ecosystem” and must therefore be considered as a security.

The complaint identified Ripple Labs’ XRP II which serves as Ripple’s licensed money services business; Ripple chief executive officer Brad Garlinghouse and 25 other unnamed persons affiliated with the firms as defendants.

“Here, the XRP offered and sold by the defendants had all the traditional hallmarks of a security, yet defendants failed to register them as such. The purchase of XRP constitutes an investment contract, as XRP purchasers, including plaintiff, provided consideration (in the form of fiat, such as U.S. dollars, or other cryptocurrencies) in exchange for XRP. XRP purchasers reasonably expected to derive profits from their ownership of XRP, and defendants themselves have frequently highlighted this profit motive,” the lawsuit read.

It can be noted that Oconer’s filing seeks damages for the price drop of XRP this year, explaining that while traditional securities would afford owners some measure of control over the firm, XRP does not allow such move.

His filing also claims that Ripple has complete control over the XRP ledger and that the network is not decentralized like Bitcoin or Ethereum.

In the past, two other lawsuits with similar claims were already filed against Ripple. The first one were represented by former Securities and Exchange Commission (SEC) chairperson, Mary Jo White and former SEC official Andrew Ceresney.

“We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law,” Ripple’s chief market strategist, Cory Johnson, expressed before amid all the allegations against XRP.

If the allegations against XRP are found to be true, Ripple and the cryptocurrency exchanges that list the coin for trading will likely face legal ramifications.

As of this writing, XRP is valued at $0.46 per token, down by 5.47 percent.