It has been a tumultuous week for San Francisco based Ripple Labs which now finds itself embroiled in another law suit. This time a disgruntled investor has taken up legal action claiming the blockchain firm has violated federal securities laws.
Digital Coins Created ‘Out of Thin Air’
According to Thursday’s class action suit which is currently being discussed on Reddit, the company failed to register with the Securities and Exchange Commission (SEC) before offering its digital tokens up for sale. James Taylor-Copeland, the San Diego attorney representing plaintiff Ryan Coffey, filed the suit to the California State court with a list of complaints regarding securities law violations.
It goes on to call out Ripple Labs, CEO Brad Garlinghouse, and a subsidiary company called XRP II as defendants and seeks unspecified damages on behalf of all investors that purchased the digital tokens. The allegations include the creation of virtual tokens ‘out of thin air’ from which the company profited by selling them to the public in an ‘endless initial coin offering’.
“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 …”
The SEC has yet to officially announce whether cryptocurrencies such as XRP are considered securities. However, according to reports a former top regulator thinks two of the most popular cryptocurrencies, Ethereum and XRP, are “noncompliant securities” operating outside U.S. laws. It will be up to the courts to decide but Tom Channick, Ripple’s corporate communications boss told media;
“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.”
Some are already questioning the sanity of the case which is likely to cost tens of thousands of dollars over the loss of just $551.89 by the plaintiff.
Binance Lists XRP/USDT
In related news, Binance announced the listing of XRP/USDT trading options yesterday which widens the reach of the company’s digital coins. The world’s third largest cryptocurrency has traded marginally higher today in Asia with a 1.4% gain to $0.90. Over the week XRP is up almost 10% and in the past month it has climbed 80% from $0.50 as the market recovering continues. It will reach a dollar once again if current crypto momentum continues.