We’ve arrived at a point where cryptocurrency regulations often lead to intense debates and various other issues, including lawsuits, as Ripple (XRP) is currently finding out, facing its third lawsuit for security fraud.
On June 27th, Ripple Labs Inc. and Brad Garlinghouse, the company’s CEO, received official court documents issued by the California Superior Court on allegations of security fraud and illegal price manipulation.
The main plaintiff, in this case, is David Oconer, a California-based private investor. The current investigation is one of three lawsuits issued in the last two months. The plaintiffs claim that the company has gained increased capital by misleading the public through the sale of unregistered securities under California’s Corporate code.
This is mainly due to the fact that Ripple retains most of its XRP tokens. There are many who believe that the cryptocurrency has all the characteristics of a security. According to the California Corporate code, it means that Ripple is actually actively committing security fraud.
Ripple alleged to have used its XRP supply to drive prices higher
The court documents are related to Ripple’s public announcement of placing 55 billion XRP in escrow. This has led to an 11,59% price increase in the next quarter. In short, Ripple is alleged to have deliberately used its XRP supply to manipulate the market by artificially driving prices higher. The plaintiffs are asking for a full refund, as well as damages.
“While publicly touting its xCurrent, xRapid and xVia enterprise solutions (collectively, “Enterprise Solutions”), Ripple’s primary source of income is, and has been, the sale of XRP. Ripple generated over $180 million in gross process through XRP sales in 2017 alone,” the court document states.
Ripple’s head of corporate communication, Tom Channick, commented on the lawsuit saying that “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.”
In response to all these allegations, Ripple has brought in Mary Jo White, former Securities and Exchange Commissions (SEC) chair, and her enforcer, Andrew Ceresney as legal defendant representatives. It’s quite clear that Ripple Labs is not taking this lawsuit lightly, as the result might prove to be one of the most important precedents for cryptocurrency industry regulations in the U.S.
Currently Ripple (XRP) is ranked 3rd on CoinMarketCap, with a total capitalization of $19,240,390,796, a circulating supply of 39,262,097,329 XRP, and a 24-hour volume of $299,762,000. Ripple (XRP) is currently up 1,74%.