Ripple Labs has been served with yet another lawsuit seeking to have its cryptocurrency, XRP, classified as asecurity. The class-action suit was filed a few days ago claiming Ripple was in violation of existing securities laws.
According to the lawsuit, filed in California’s Superior Court in San Mateo County,the way Ripple Labs manages and distributes its XRP coins makes the coin to be a security. It also claimed that Ripple Labs, along with CEO Brad Garlinghouse and money service business XRP II LLC, has conflated XRP with other company product offerings, which makes it a security and not a coin.
The class-action lawsuit, filed by David Oconer, was the third of its kind for Ripple.
Boom! 55B $XRP now in escrow. Good for supply predictability and trusted, healthy $XRP markets. Glad to finally let this #cryptokitty out of the bag!https://t.co/TpOTuwwwdd
— Brad Garlinghouse (@bgarlinghouse) December 8, 2017
In May 2017, Ripple publicly announced it wold distribute some 61.68 billion XRP on a limited basis. Of this number, the company placed 55 billion XRP in an escrow account. Oconer’s suit claimed the Ripple executives actively participated in promoting the move with a goal of driving the price of the coin up.
According to reports, XRP prices increased after the company limited the supply, rising from $0.22 per token in December 2017 to $3.38 per token in January 2018.
In the last couple of months, Ripple Labs has been slapped with three lawsuits seeking to have XRP categorized as a security. The first lawsuit came in May when Ryan Coffey filed a suit against the company. In his complaint, Coffey claimed that Ripple was in violation of securities regulations. He further said that the company was conducting a “never-ending initial coin offering.”
In June, Ripple received another lawsuit filed by Vladi Zakinov in California’s Superior Court in San Mateo. The complaint also stated that XRP was a security and not a coin.
In an interview with CCN, Ripple Labs Chief Marketing Strategist Cory Johns said their cryptocurrency was not a security. He explained that XRP does not meet the legal requirements to be classified as a security. Nevertheless, whether XRP is a security or not remains to be the decision of the court.
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