The lawsuit against XRP and the Ripple CEO originally filed in May 2018 and centered around allegations that Ripple violated the Securities Act through a 2013 initial coin offering (ICO) is now re-activated.
On March 25, we can see an amended complaint of the lawsuit against XRP which accuses the CEO of Ripple, Brad Garlinghouse, of touting the token to prospective investors while silently liquidating his holdings.
In the amended complaint, we can also see that Garlinghouse represented himself as “very, very, very long” and “on the HODL side” with regard to XRP during 2017. This suggests that the Ripple CEO was holding his XRP for the long-term.
The lawsuit against XRP is in the crypto news now and despite all the online posts, the plaintiffs in it allege that Garlinghouse sold 67 million XRP during 2017, adding that he was also liquidating all of the tokens that he received from Ripple within days of receipt.
In the lawsuit, we can also see that “all 100 billion of the XRP in existence were created out of thin air by Ripple at its inception in 2013, before any distribution and without functionality except as a speculative investment,” and it further adds the following:
“The value of XRP owned by Defendants substantially exceeds the value of Ripple’s revenue or cashflow from all other sources. Ripple’s dominant value proposition are the XRP tokens it owns and sells. Ripple’s value proposition as a company depends upon the promotion of XRP, yet XRP is entirely or essentially pre-functional and purchased by investors in anticipation of profit based on the efforts of Ripple.”
As the plaintiffs also added, there are claims that Ripple and Garlinghouse misrepresented XRP as having the utility of comprising a “bridge currency” so that the token could evade being classified as a security. “Defendants’ claims that XRP has a utilitarian purpose are false,” the plaintiffs noted, adding:
“These claims are misrepresentations and omissions of material facts to investors because the utility of XRP (or lack thereof) is pertinent to the value of XRP. Simply stated, these false claims about XRP’s utility are nothing but an attempt to avoid the application of securities laws and drive demand for XRP.”
While the Ripple news showed that the company sought the dismissal of the lawsuit in September, the US District Judge Phyllis Hamilton allowed the cryptocurrency to move forward in February – but requested that the plaintiffs explain the basis for their claims later on – which is what is happening now.
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