Ripple, the XRP parent company, is facing yet another class-action lawsuit attributed to the classification of its native token. Bitcoin Manipulation Abatement, LLC filed on May 1st the action against Ripple’s CEO, Brad Garlinghouse, and the entity itself citing violation of security laws during the XRP token sale.
The documents filed in a North California Court claim that XRP was marketed and sold to the benefit of a few stakeholders in the firm. The filings highlight that XRP was, in fact, sold like an unregistered security and consequently violated California’s security laws,
“…in order to drive demand for and thereby increase profits from the sale of XRP, Defendants have made a litany of false and misleading statements regarding XRP in violation of California’s securities laws, and false advertising and unfair competition laws.”
Bitcoin Manipulation Abatement Vs Ripple
Though the action adds to Ripple’s problems, Bitcoin Manipulation Abatement appears to have a very minimal online presence and has been existent for only a year. However, this is not the first time the entity is filing an action against a big boy in crypto. The firm had taken FTX derivatives exchange to court back in November 2019; they were seeking close to $150 million in punitive and exemplary damages, but the matter was dismissed a few weeks later.
This is not to say that Ripple is off the hook, the filings made by Bitcoin Manipulation Abatement place the firm on the spot over its $1 billion capital raise through the XRP token sale. According to the suit, Ripple made a litany of false and misleading statements about XRP as a digital asset. The complaint further argues that XRP was sold with the vision of capital growth adding that the asset is barely a digital currency,
“There are no products or services that can be purchased with XRP.”
Ripple’s Woes in Court
Ripple is no newcomer to class action lawsuits; the firm has been in and out of court quite a few times despite its significant market cap. Back in 2018, Ripple was sued by one of its investors, Bradley Sostack, who also cited violation of security laws.
Though yet to be resolved, Bradley is allegedly seeking the classification of the XRP token as a security. Interestingly, the SEC has been relatively quiet towards the definition of this digital asset as a security.
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