San Diego’s attorney, James Taylor Copeland, has filed a class action on behalf of investor Ryan Coffey for unspecified damages against Ripple Labs, after declaring Ripple sold unregistered securities.
According to Bloomberg, the complaint details Ripple’s questionable business practices. It claims Ripple ostensibly creates billions of coins "out of thin air", resulting in a "never-ending ICO" to raise money for the company’s blockchain services. 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.
Unlike cryptocurrencies such as Bitcoin and Ethereum, which are mined by those validating transactions on their networks, all 100 billion of the XRP in existence were created by Ripple Labs at its inception in 2013. “In other words, unlike some virtual currencies, XRP was fully generated prior to its distribution.” 20 billion XRP, or 20% of the total XRP supply, were given to the individual founders of Ripple Labs, with the remaining 80 billion retained by Ripple Labs.
Ryan Coffey, purchased 650 XRP coins in January for $1,690 and subsequently sold them when Ripple’s token began to crash at $1,139 (hence incurring a loss of 32% of his initial investment). The claimant is also seeking a public declaration by Ripple’s CEO, Brad Garlinghouse, that the firm’s tokens are in fact a type of unregistered, illegal security. He is also seeking a declaration that Ripple and its CEO, Bradley Garlinghouse, sold unregistered securities.
As per the complaint:“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.”
Ripple still maintains the token’s non-security status:
“We’ve seen the lawyer’s tweet about a recently filed lawsuit but have not been served. Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security.”
Price and Performance of Ripple (XRP)
Twenty-four hours ago, XRP was trading at 0.866. As news broke about the class action in play, the XRP 30-day projection, has dipped slightly this morning to 0.816. Ripple Labs has also been mentioned for its attempt to convince some of the digital exchange platforms to list Ripple. Ripple still remains the third largest cryptocurrency by market cap with $35.04 billion USD, according to coinmarketcap.
Ripple has offered two exchanges, Gemini and Coinbase, millions of dollars to be listed in order to enhance the value of the token. Gemini reportedly turned down a million dollars, while Coinbase was offered a loan of $100 million of Ripple. Ripple (XRP) has also announced that the company would now be listed on Binance.