A recently-issued lawsuit against Ripple (XRP) claims that the crypto is scamming people. The lawsuit was filed in California this Thursday, and the ones that are suing are Ripple’s very own investors.
The new events in the world of cryptos saw some pretty negative development, especially for Ripple (XRP). This Thursday, on May 3, a class-action lawsuit was filed against Brad Garlinghouse, the CEO of Ripple, as well as against the company Ripple Labs itself. Not only that, but the lawsuit even includes Ripple’s subsidiary, XRP II.
The lawsuit against Ripple
The lawsuit was filed by the firm called Taylor-Copeland Law, which is a company that focuses their efforts on crypto and blockchain litigation. The company filed a lawsuit in California court this Thursday, and it did so on behalf of several Ripple investors, including Ryan Coffee.
The investors claim that Ripple is breaking both, federal, as well as state security laws in order to make money for itself. In addition to breaking laws, these investors also claim that Ripple is misleading the public regarding their services.
When they first hear about this, many assume that these people are just angry for investing into cryptos and losing money due to a bad investment. However, this time, it may not be the case. There is one thing different about Ripple, and this very difference is the most important element of the lawsuit.
In order to explain this, let’s see how things are at Bitcoin (BTC). Whenever a crypto miner validates BTC transactions, he gets a new Bitcoin. That way, BTC supply and demand are tied together, and the more people decide to use this crypto, the more of it will appear in the world.
In order for this process to start, ICOs are often being held by a new startup based on blockchain technology. A certain percentage of the firm’s digital currency is sold upfront, and the rest of the supply ends up being generated by the miners as they buy or sell tokens.
How is Ripple different?
Back in 2013, Ripple Labs decided to make 100 billion coins. They kept 80% of the supply, while the rest was distributed between the founders, according to the lawsuit. After that, the lawsuit claims that they held an essentially never-ending ICO, and sold off that XRP to the public.
Basically, Ripple was trying to convince the investors that there is an increase for XRP by the public when there really wasn’t any. The lawsuit also claims that Ripple attempted to bribe exchanges so that they would put XRP on the list.
Finally, the lawsuit claims that these signs point to XRP being a security. If this is true, then what Ripple did violates the SEC laws, since those laws say that companies need to announce certain info to their investors. This, of course, includes all the potential risks when it comes to investing.
What does Ripple say?
Ripple’s spokesman released a statement in which he said that the company has seen the lawyers’ tweet about the lawsuit. Just like any other proceeding, the company will do its own assessment in due time. As for the question of XRP’s nature, that is something that SEC will decide, but RIpple itself still firmly believes that XRP is not a security.
One of the biggest questions right now is what will happen to Ripple’s price? Negative press was able to damage it in the past, so even if the lawsuit doesn’t hurt the company, the negativity of the event might.
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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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