Ripple Under Lawsuit By Investor Alleging “XRP Is A Security”
An investor has filed a class action lawsuit against distributed ledger startup Ripple alleging that the company has not complied with state and federal securities laws, after claiming loss of funds when buying and selling the cryptocurrency XRP.
The defendant, Ryan Coffey, is represented by San Diego attorney James Taylor-Copeland. He filed the suit in the San Francisco County Superior Court on Thursday. Coffey purchased 650 XRP on Jan. 5 and sold it on Jan. 18 of this year for USDT, which he then exchanged for USD, sustaining a loss of around 32 percent, or $551.89.
One of the claims made in the lawsuit is that the plaintiff was not expecting to lose money on his investment due to promotional campaigns ran by Ripple Labs, i.e. retweeting favorable article about XRP and attendance by Garlinghouse at crypto conferences. The tweet was the following:
“XRP purchasers reasonably expected to derive profits from their ownership of XRP, and Defendants themselves have frequently highlighted this profit motive […] Given its reliance on sales of XRP, it is unsurprising that Ripple Labs aggressively markets XRP to drive demand, increase XRP’s price, and thus its own profits.”
The class action suit alleges that the defendants have violated both the Securities Act and the California Corporations Code. Tom Channick, a representative for Ripple, mentioned in an email interview today that, according to the company, Ripple is not a security under U.S. law:
“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 a security is for the SEC to decide. We continue to believe XRP should not be classified as a security.”
Ripple is currently trading at $0.88 and is the third largest cryptocurrency by market capitalization.