An angry investor has just mounted some trouble for Ripple. Ryan Coffey, an investor who lost 32% of his money to rapid fluctuations in the price of XRP, has now alleged in a class-action lawsuit that Ripple is violating US securities law by running a never-ending ICO.
The lawsuit names Ripple CEO Brad Garlinghouse as a defendant in the case, and argues that Ripple is violating the US Securities Act and the California Corporations Code by offering unregistered securities to general public in a “never ending ICO”. It claims:
“Defendants have since earned massive profits by quietly selling off this XRP to the general public, in what is essentially a never-ending initial coin offering (“ICO”). In order to increase demand for XRP, and thereby increase the profits it can derive by selling XRP, Ripple Labs has consistently portrayed XRP as a good investment, relayed optimistic price predictions, and conflated Ripple Labs’ enterprise customers with usage of XRP.”
Ryan Coffey had purchased 650 XRP tokens worth $1690 on January 6, 2018. However, he had to sell his tokens within 2 weeks due to a sharp fall in the prices of Ripple. He ultimately suffered a loss of 32%. Now he is the lead plaintiff in this case, and the case has been filed on behalf of all Ripple investors. Taylor-Copeland Law, a California based law firm specializing in blockchain and cryptocurrency related cases, has been hired by him to file the case.
In the recent days US Securities and Exchange Commission (SEC) has also launched inquiries into dozens of ICOs to determine whether they’re securities or utility tokens. Regulators are also going to meet on Monday to discuss this classification.
Ripple, however, has maintained that it’s not a security. Responding to the lawsuit filed by Coffey company’s Communications Head Tom Channick told CCN:
“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.”
As of now XRP is valued at $0.9 with a market cap of $35 billion, which makes it 3rd largest cryptocurrency in the world.