XRP Investors Files Class Action Lawsuit against Ripple
Taylor-Copeland Law, a private law firm in California, has filed a class action suit against Ripple Labs, its wholly owned subsidiary XRP II, and Ripple Labs’ CEO Brad Garlinghouse on behalf of aggrieved investors who have sustained losses as a result of Ripple’s sale of XRP tokens.
The lawsuit filed with the San Francisco County Superior Court on Thursday, alleges that Ripple labs have earned massive profits in violation of state and federal securities laws by selling XRP to the general public, in what is essentially a never-ending initial coin offering. The complaint further alleges that XRP has all the hallmarks of a security and that Ripple tries to obscure its sales of XRP by doing so on exchanges rather than directly.
Ripple Labs which holds about 55 billion XRP in an escrow account has been accused of monopolizing the XRP crypotcurrency market. The escrow allows the company to sell up to a billion XRP per month if it so chooses in order to fund new projects and acquisitions. Selling such an amount would likely have a drastic effect on the cryptocurrency’s value, thus leaving investors with little or no profit.
According to a report by Ripple Labs, in the first quarter of 2018, “market participants purchased $16.6 million [of XRP] directly from XRP II. XRP II also “sold $151.1 million worth of XRP” on exchanges.
The plaintiff Ryan Coffey -who is an XRP investor himself- claims that Ripple Labs aggressively markets XRP to drive demand, increase XRP’s price, and thus its own profits. He also accuses the company of creating the rumours of a possible coinbase listing in late 2017 and early 2018 that fueled the XRP price increase.
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