The crypto token company allegedly sold its XRP coins to the public recently in what was “termed as a never-ending and continuous initial coin offering,” according to the lawsuit. As reported by Bloomberg, an investor went on to file the lawsuit against the financial tech startup (arguably the third most valuable cryptocurrency in the market by market cap) alleging that the digital currency firm violated both state and federal laws after it allegedly offered unregistered securities to investors in a recent fundraiser.
Ripple is in Trouble
The legal complaint asserts as reported by Bloomberg that XRP created billions of digital coins “from nowhere or out of thin air as the complainant put it” and sold these coins to the public in a never-ending ICO offering.” As per the issue of cryptocurrencies been regarded as securities the debate is still on hence whether this suit will be fruitful or not remains to be seen.
The lawsuit filed by an investor named Ryan Coffey in the San Francisco County Superior Court this Thursday seeks class-action status. He is seeking damages “on behalf of every other investor who purchased Ripple’s tokens issued on the said date and sold by the Defendant.” The complaint purchased 650 Ripple tokens for 2.60 USD each and sold them several weeks later for about 1.70 USD each, according to the lawsuit. Ripple have shared their view on the issue in a statement:
“We have seen the tweet about a lawsuit filed against us recently, but we haven’t been served. Like is the case in civil proceedings, we will assess the situation around the allegations when it is appropriate. Whether Ripple is a security or not is up to the SEC to decide. We will continue to say that XRP shouldn’t be called security.”
James Taylor-Copeland, the U.S attorney who is representing Coffey, did not respond immediately when a request for comment was made. Coffey, the investor, seeks unspecified damages plus a declaration that the digital currency firm sold unregistered securities.