Ripple and its CEO Brad Garlinghouse have been hit with another class-action lawsuit alleging securities laws violations regarding the sale and marketing of the XRP token.
The lawsuit, filed in the Northern California District Court, claims the third-largest cryptocurrency by market capitalization, XRP, was marketed to the public to raise over $1 billion and drive demand. It accuses Ripple of making “a litany of false and misleading statements regarding XRP.”
The complaint was filed by attorney Pavel Pogodin through his firm, Consensus Law. The case’s plaintiff is Bitcoin Manipulation Abatement LLC, a little-known entity with no online presence. Public records show it was set up in March 2019, with Pogodin himself listed as its “resident agent.”
The lawsuit argues XRP is a security because investors were led to believe they could expect to make a profit, and that it was a long-term growth asset. The law firm asserts that XRP is not a currency because “there are no products or services” that be purchased using XRP.
It adds that all 100 million XRP in existence were created in a centralized manner in 2013 by Ripple, and accuses the firm of earning “massive profits” by selling XRP to the general public, adding its sole value proposition as a company “depends upon the promotion of XRP.”
In what is getting to be old hat, yet another lawsuit against Ripple and Mr. Garlinghouse saying that XRP is an unregistered security, created out of thin air, and serves no real purpose except to make a couple of people really rich. pic.twitter.com/4g79ZUA1oD
— Palley (@stephendpalley) May 4, 2020
Ripple has been facing various class-action lawsuits from investors who accuse the company of failing to register XRP as a security with the U.S. Securities and Exchange Commission (SEC) and provide the public with appropriate documents and disclosures, and who accuse it of selling XRP for a profit while touting it.
Last year, it’s worth noting, the amount of XRP sold by Ripple decreased 80% as it decided to halt programmatic sales after dealing with an uptick in “FUD” and the “spread of misinformation.” The firm has also filed motions to dismiss these lawsuits, and said XRP is not a security.
Bitcoin Manipulation Abatement LLC, it’s worth noting, also filed a lawsuit against cryptocurrency derivatives exchange FTX over alleged market manipulation attempts.
Featured image via Pixabay.