Ripple and XRP Face a New Lawsuit
Ripple Labs, which launched XRP, faced another class action filed on behalf of Florida-based buyer Tyler Toomey. The company has been accused of violating the Florida Securities and Investor Protection Act by offering XRP to retail investors without any restrictions.
According to a U.Today report, Ripple’s corporate business expenses forced the company to sell XRP “as widely as possible” and control its supply and liquidity. In other words, the overwhelming majority of Ripple’s revenue came from XRP sales (over $ 1 billion), and Ripple financed its operations with these sales.
Ripple CEO Brad Garlinghouse is involved as an individual defendant in the lawsuit and allegedly manipulated the price by pausing XRP sales for certain periods from April 2017 to December 2019, making a profit of about $ 150 million in this way:
“At various times between April 2017 and at least December 2019, Garlinghouse also paused XRP sales as the market price of XRP fell to avoid lowering the market price of XRP.
Although Garlinghouse said on CNBC that he was thinking long-term in XRP and predicted in a Bloomberg interview that the market value could potentially reach “trillions of dollars”, he made a fortune with sales.
Garlinghouse has stood out as a spokesperson for Ripple’s efforts to market XRP as an investment from which investors could potentially profit from it. Garlinghouse told investors that he often invests in XRP and is hopeful about this investment.
Ripple’s Legal Issues Are Increasing
Ripple Labs is struggling with a similar class action lawsuit filed by lead plaintiff Bradley Sostack in May 2018. The trial has been going on for almost three years.
The company’s legal problems were taken to a different level after they were sued by the US Securities and Exchange Commission (SEC) in December. The company was also sued in December 2019 by the large asset manager Tetragon, who wanted to buy back his equity in the company.