Despite the adoption of Ripple’s blockchain by many companies, Ripple Labs is facing another lawsuit in California’s Superior Court sitting in San Mateo County. This is the third time the company is facing a lawsuit, and the interesting fact is: the company has to face the lawsuits for three times for one common reason, the violation of securities law. Plaintives in all the three lawsuits have claimed that the company has violated the securities law because it issues, controls, manages, and supports the XRP cryptocurrency. The latest lawsuit has been filed against Ripple Labs, Inc. and the CEO Brad Garlinghouse on 27th June by David Oconer.
According to the lawsuit by California resident David Oconer, XRP is an integral part of the company and is conflated with the company’s various product offerings. This makes XRP a security and thus, the company is violating the securities law by supporting, controlling, and selling it. The plaintiff in this latest lawsuit has also alleged that the company has played various tricks and used false marketing techniques to increase the value of the XRP coin. He has also alleged that Ripple’s escrowing of 55 billion XRP funds was also a technique to increase the value of the cryptocurrency. As a reference, he has given the tweet of Brad Garlinghouse, saying that 55 billion escrow funds are good for supply predictability and trust.
The lawsuit also states that the company has succeeded to create intended effect by limiting the supply of the XRP cryptocurrency. This limitation in the supply and false marketing had increased the value of XRP cryptocurrency from $0.22 on 7th December to $3.38 on 7th January. Ripple (XRP) has remained the top cryptocurrency in 2017 with an average increase of about 30,000% in its value. XRP coin touched its all-time high value of $3.60 on 4th January. These bullish signs in the value of XRP coins attracted many investors across the world. Since then, the XRP currency has never regained its value but businesses all across the world are adopting its blockchain for real time processing of cross border transactions.
Last month, a similar kind of lawsuit was filed against Ripple in California’s Superior court in San Mateo County. The plaintiff was of the view that Ripple Labs, Inc. should have registered XRP coin before selling it. He also alleged that XRP is a security under the control of Ripple Labs and selling it is violation of securities law. Ripple Labs, Inc. has always refuted these arguments, saying that XRP is not a security. Cory Johnson, the Chief Market Strategist of Ripple, said in an interview to CCN in April that XRP is not a security because it does not meet the standards.
To summarize, we can say that XRP is not a security as SEC body has never mentioned Ripple as the security, and Ripple Labs, Inc. is always waiting for a confirmation of this from SEC. Ripple’s CEO Brad Garlinghouse has always said that XRP and Ripple are two different entities. XRP is the cryptocurrency but Ripple is a blockchain platform designed to process global transactions within seconds.
This is a guest post. Opinions in the article are solely of the writer and do not reflect AdFunnel Project’s view.