Ripple Labs Is Hit With Another Lawsuit Claiming XRP as Securities

It seems that the trouble for San Francisco-based blockchain startup Ripple continues to remain as the company is now hit with another lawsuit filed in California while being accused of securities fraud. This is for the third time in just a matter of two months where Ripple has been charged with the lawsuit.

In the latest case, the plaintiff has alleged Ripple to have made money by breaking all the federal and state securities laws as well as misleading people with the sale of its unregistered XRP tokens. The lawsuit is filed in California’s Superior Court sitting in San Mateo County and names Ripple CEO Brad Garlinghouse and XRP II LLC, a money service business unit of Ripple Labs as defendants.

The lawsuit also alleges Ripple Labs to have promoted the XRP digital tokens in an effort to inflate its price. Another way used by the company to achieve this was to limit the distribution of the XRP tokens. The lawsuit claims that in May 2017, Ripple disclosed that the distribution of 61.68 billion XRP tokens with the company keeping 55 billion tokens in its escrow accounts. The lawsuit claims that this way Ripple CEO along with the employees were active in promoting this view and thus driving the prices up.

The lawsuit complaint reads: “Ripple’s public commitment to limit the supply of XRP had its intended effect. In the weeks that followed, the price of XRP rapidly increased, from approximately $0.22 per token on December 7, 2017 to $3.38 per token on January 7, 2018.”

Just a month ago, Vladi Zakinov filed for a lawsuit against Ripple Labs in California’s Superior Court in San Mateo County, alleging the company for having control over the supply of XRP tokens. Znkinov’s lawsuit states that Ripple should have registered XRP tokens prior to selling them and further accuses the company and its executives of making improper and misleading statements which caused the price of XRP to go up.

In May 2018, Ryan Coffey filed for an class action lawsuit alleging the company of violating securities regulations. Ryan Coffey said that Ripple Labs and other defendants have profited huge through what he calls as the “never-ending initial coin offering.” The lawsuit also accuses the company of promoting optimistic price predictions for its tokens.

Replying to all these allegations, Ripple Labs in the past have denounced the charges of XRP being a token. In one of the television interviews, chief market strategist of Ripple, Cory Johnson, said: “We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.”