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Lawsuit Against Ripple Raises Interesting Concerns about the Purpose of XRP tokens

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A class lawsuit has been signed by an investor against Ripple. The investor claimed to have lost funds while trading the XRP cryptocurrency alleging that Ripple (the startup technology company managing the XRP token) is in violation of federal and state laws on security.

The investor who goes by the name Ryan Coffey was represented in court by James Taylor Copeland who is a San Diego based attorney. According to Coffey, the lawsuit issued on Thursday in San Francisco County Superior Court was intended to speak on behalf of other investors as well. Coffey claims that the rest of the investors represented in the lawsuit also bought Ripple (XRP) tokens and lost their investments in the long run. The lawsuit was issued against Ripple, a company headed by Brad Garlinghouse and registered under a South Carolina limited liability license as a company with 10 unnamed partners.

Ripple Under More Scrutiny

This comes just weeks after Ripple Labs and Garlinghouse came under scrutiny over the clarity of the relationship between the XRP tokens and the company Ripple. According to Ryan Zagone who is the director of Ripple’s regulatory relations, “there’s no direct connection between Ripple the company and XRP.” He said this on Tuesday to a UK parliament committee.

The XRP token has had various ups and downs in the crypto space and it has managed to capture the attention of many cryptocurrency investors and traders both in the retail sector as well as the institutional sector. Last year alone, the coin gained a market capitalization of over $140 billion only to fall back again below the $35 billion mark as of this publication.

The Thursday lawsuit came to light after Ryan Coffey’s lawyer tweeted about it.  However, the lawsuit has led a fresh rise of concerns over whether the XRP token is a security or not. In fact, there have been reports issued by a major cryptocurrency exchange questioning the real purpose of XRP even as the mother company brings in partnerships with industry-leading companies such as MoneyGram, Microsoft not to mention close to 100 banks registered on its RippleNet platform.

Ripple on the Defense

While Ripple was on defense on Tuesday, more skepticism arose from the hearing with the complaint arguing that,

the development of the XRP Ledger and the profits that investors expected to derive therefrom were and are based entirely on the technical managerial and entrepreneurial efforts of Defendants and other third parties employed by defendants

This argument, based on the realization of the XRP token as securities issued by the Ripple company was met with a contrary comment received by CoinDesk after reaching out to Tom Channick, the head of corporate communication at Ripple, who said that it’s the Securities and Exchange Commission that decides on whether an asset is a security.

Basically, the US federal law requires that a company seeking to sell securities should first register with SEC. After all, it is the duty of the Howey Test to qualify financial instruments as securities based on the 1964 Supreme Court case standards.

The lawsuit, however, sheds light on the uncertainties surrounding the relationship between XRP and Ripple. In his comment to CoinDesk, Chammick also added that although they have seen the lawyers tweet, the company “has not been served”. He went on to say that Ripple management does not consider XRP to “be classified as a security”.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Altcoins

Cryptocurrency Collateralized Debt Positions Are Growing in Popularity

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While Bitcoin (BTC) continues to hover around the magical 10,000 price level, altcoins continue to fight an uphill battle.  Simply put, hopes of a future bull run continue to diminish as Bitcoin maintains its dominance.  One school of thought is that a few altcoins will survive and flourish, but which ones are anyone’s guess.  That being said, it’s hard to go wrong picking against the top coins like Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and EOS.  These projects have managed to find a foothold in the market and have a better chance than most of staying there.  While traders wait for their positions to increase in value, one opportunity that may be worth looking at is initiating a collateralized debt position.

What is a Cryptocurrency CDP?

In traditional terms, a CDP is essentially putting up collateral in order to receive a loan against the deposited amount.  There are several examples of this in our day to day lives.  Auto title loans from large companies like TitleMax are extremely popular with consumers.  Consumers are essentially able to use their car as collateral in exchange for a cash payment which can then be used for whatever needs the consumer has.  The consumer can continue using their car as long as debt payments are made.

The same concept applies to cryptocurrency CDPs.  Consumers are able to put up crypto tokens, such as…

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Altcoins

Hodium Presents a Compelling Opportunity for Outsized Investment Returns

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I’m sure all of us remember the cryptocurrency glory days of 2017 and early 2018.  It was one of the biggest bull runs in history and created incredibly wealth for quite a few early entrants.  Unfortunately, for most of us, those gains have most likely been wiped out during the altcoin apocalypse.  The truth is that traders probably thought a bit too highly of their trading abilities when the reality was that anyone could have thrown a dart at a board and ended up making money.

As markets mature (and the crypto market is definitely maturing) it becomes more and more difficult to generate alpha.  In that regard, it’s similar to traditional financial markets.  I can remember trading during my high school days.  It was the late 90s and right in the middle of the dot.com boom.  Eventually, however, the euphoria fades away and reality hits hard.  Now, it’s become rather difficult to actually trade profitably which has given way to the rise of hedge funds.

Hedge funds are investment funds that pool capital from accredited and/or institutional investors and invest in a variety of assets, often with extremely complex portfolio-construction and risk management techniques.  The professionals employed by hedge funds are the best of the best and have spent years honing their craft.  That is why they’re able to make the millions of dollars that they normally…

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Altcoins

KaratGold Proves Its Business Model By Providing Official Documents

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There has been a lot of renewed enthusiasm in the cryptocurrency market thanks mainly to Bitcoin’s strong move about 10,000.  Although Bitcoin continues to show its dominance, the altcoin market has yet to benefit from that rally.  A few of the largest altcoins remain popular but the rest of the market continues to lag behind.  In 2018, there was a lot of talk regarding a possible altcoin apocalypse where only the strong would survive.  That prediction appears to be playing out as expected.  Going forward, only the best projects that have a real world need will survive.  Crypto traders will have to spend a lot of their time doing proper research in order to find the best opportunities, just like in all financial markets.  One promising project that appears to have the makings of a future winner is KaratGold Coin.

KaratGold Background

KaratGold Coin is a cryptocurrency developed by the reputable German company Karatbars International, which maintains a leading position in the market of small gold items and investments. The project is part of a larger ecosystem, which involves several blockchain solutions that can be used for transactions, communication, investing and other tasks. During the past few weeks, however, the KaratGold ecosystem has been a target of unsavory scam allegations.  

Karatbars International and GSB Gold Standard Banking Corporation…

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