Ripple is currently priced at $0.903935 which makes it the third largest cryptocurrency regarding market capitalization. However unfortunate news struck Ripple with an investor filing a lawsuit stating that Ripple is selling billions of coins out of thin air and selling them to the public.
The lawsuit states that the investor named Ryan Coffey who has filed the complaint has sold his XRP tokens in what was ‘essentially a never-ending initial coin offering.’
Taylor Copeland Law, a firm which is focused on Blockchain and Crypto litigation has filed the Ripple lawsuit on behalf of Ryan Coffey.
According to the summary of action-
“It 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 … Unlike cryptocurrencies such as Bitcoin and Ethereum, which are mined by those validating transactions on their networks, all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013.”
These allegations go against state and federal laws as unregistered securities are being offered to retail investors.
According to the Securities and Exchange Commission (SEC) selling or offering unregistered securities to public investors is serious misconduct. Hence these securities have to be registered, so problems occur in the long run.
The class action suit was filed in the San Francisco County Superior Court on behalf of all investors who purchased Ripple tokens issued and sold by them.
However with strict definitions still not being implied Ripple has replied to this class action suit with Ripple’s head of corporate communications, Tom Channick saying-
“We’ve seen the lawyer’s tweet about a recently filed lawsuit but have not been served. Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is security is for the SEC to decide. We continue to believe XRP should not be classified as a security.” Negative press has strong effects on values of cryptocurrencies, and this was seen in the past.
The case is noted as Coffey v. Ripple Labs Inc., Superior Court of the State of California (San Francisco).
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