Ripple Labs is the official company behind XRP, and it has been issued with one more lawsuit on the premise of securities fraud according to the latest reports.
Ripple is being investigated through their ownership of XRP which is their native currency.
XRP accused of being a security again
Ripple owns a considerable amount of XRP and lots of voices from the crypto space have been claiming that XRP as a currency matches the features of a security.
This would mean that Ripple has engaged in security fraud. Most people don’t believe that Ripple’s XRP is a security, but this doesn’t seem to stop others from taking action against the company.
“In this latest suit, dated June 27, a private XRP investor alleges that Ripple Labs Inc. and its CEO Bradley Garlinghouse have conflated their token with its proprietary Ripple technology and even illegally profited from price increases the whole time,” says Next Web.
Next Web also reports that the court documents point to Ripple’s publicized move to place 55 billion XRP tokens in escrow as a means to ensure certainty of total supply.
The whole thing was seen as a means of reassuring investors that massive sell-offs wouldn’t abuse Ripple’s majority control of the total circulation.
Bad news for Ripple
This is terrible news for Ripple especially because it may reflect really badly on XRP’s prices in the following days.
It seems that the association of XRP as a security with Ripple is pretty damaging for the company. XRP would probably benefit from a listing on Coinbase, and this exchange doesn’t list securities.
Even the smallest hint that XRP is a security would kill Ripple’s dream of XRP getting listed on Coinbase.
Boom! 55B $XRP now in escrow. Good for supply predictability and trusted, healthy $XRP markets. Glad to finally let this #cryptokitty out of the bag!https://t.co/TpOTuwwwdd
— Brad Garlinghouse (@bgarlinghouse) December 8, 2017
Ripple’s CEO responds to accusations
At CB Insights’ Future of Fintech conference held in New York, Brad Garlinghouse listed three reasons for which XRP is not a security:
- “If Ripple, the company, shuts down tomorrow, the XRP ledger will continue to operate. It’s open-source, decentralized technology that exists independent of Ripple.”
- “People who buy XRP don’t think they’re buying shares of Ripple. There’s a company called Ripple. Buying XRP doesn’t give you ownership of Ripple. It doesn’t give you access to dividends or profits that may come from Ripple.”
- “XRP is solving a problem. There’s no utility in a security.”
You can read the complete text of the lawsuit here.
