Cryptocurrency Firm Ripple Sued for Breaking US Securities Laws

An investor has filed a class action lawsuit against the fintech startup Ripple, alleging that the company violated state and federal securities laws. A lawsuit has been filed against Ripple Labs, its CEO, and subordinates by San Diego resident Ryan Coffey. The offended party alleges that the defendants have damaged the state and government securities laws, participating in plans to raise a huge number of dollars through the offer of unregistered ripple tokens (XRP).

Coffey in his complaint  said that, 

“This is a securities class action on behalf of all investors who purchased Ripple tokens(“XRP”)issued and sold by Defendants. It arises out of a scheme by Defendants to raise hundreds of  millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws”

According  to the lawsuit, Coffey purchased 650 XRP tokens for about $2.60 each, or $1,690, at the start of January and sold them a few weeks later at a loss of approximately $551, or about 32 percent of his initial investment. Coffey further said in his filing that 20 billion tokens were given to Ripple Labs’ founders and 80 billion to the company itself, he alleges that the defendants “earned massive profits by quietly selling off this XRP to the general public. Attorney James Taylor-Copeland representing Coffey filed the lawsuit with seeking damages on behalf of Coffey and all others who invested.

Coffey further described that 

In order to increase demand for XRP, and thereby increase the profits it can derive by selling XRP, Ripple Labs has consistently portrayed XRP as a good investment, relayed optimistic price predictions, and conflated Ripple Labs’ enterprise customers with usage of XRP.

He gave example for this, in 2014, Ripple Labs publicly stated that “we will engage in distribution strategies that we expect will result in a stable or strengthening XRP exchange rate against other currencies.”Ripple Labs greatly increased these efforts to push XRP on the general public in 2017 and 2018

The cryptocurrency world is full of risks, volatility and dynamism. It is full of uncertainty that swings both ways. One of the most important questions right now is what will happen to Ripple?