Ripple Labs Sees Third XRP Cryptocurrency Securities Fraud Lawsuit

An investor in Ripple Labs’ XRP Cryptocurrency filed a lawsuit in California against the platform under California’s Corporate code. The lawsuit was for securities fraud and it is the third one within a span of two weeks. The two prior suits were filed in the same counted and one of them has been removed to federal court in the Northern District of California.

All three lawsuits have named Ripple’s subsidiary XRP II LLC and its CEO Bardley Garlinghouse as defendants. Further, the complaints allege that due to the centralized method for management and distribution of XRP and the way the platform conflates the cryptocurrency with its own product offerings, XRP should be classified as a security and accordingly, the platform violated securities laws.

One of the lawsuits, which is a class action, features a complaint that provides in-depth explanations as to how the platform allegedly influences XRP to increase prices. This is significant, because the complaint may show that the Howey Test for the definition of as security has been met. The test was identified in SEC v. Howey.

The complaint also alleges that the platform’s actions were performed to “drive price appreciation” and to “maximize profits from XRP sales.” It was also determined that XRP’s prices increased over 1,000 percent.

Additionally, XRP is managed in a manner that is different from other cryptocurrencies. For instance, while Ether and bitcoin are mined on a blockchain by individual users to become actualized property, XRP has 100 million units in existence, 61 million of them which are owned by Ripple Labs.

Counsel for Ripple Labs has successfully petitioned the court to dismiss the allegations of fraud, arguing that only the U.S Securities and Exchange Commission can decide whether XRP is a security and the XRP is solely a cryptocurrency. Ripple’s chief cryptographer argued that XRP cannot be as security because Treasury’s Financial Crimes Enforcement Network stated that CRP is a cryptocurrency and approved its sale.

Even with the above circumstances, there is still a question as to whether a previous settlement impacts present case. According to a partner at Loeb and Loeb,

“A contrary finding by a court of the SEC would arguably contradict the FinCen determination, and no one could also surmise the SEC would not be quick [to contradict FinCen]. But that is all speculation.”

If the court or regulators do determine that XRP a cryptocurrency and is subject to federal securities law, the consequences could set precedent in California. XRP would need to stop trading and individual owners of the currency will be granted the right of recession, so Ripple would have to refund initial purchases.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Avatar
Bitcoin Exchange Guide News Team
B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,471FansLike
2,795FollowersFollow
4,194FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Bitcoin to Follow the Equities Market Up or Down? One-Month Correlation Spikes to an All-Time High

Yet another week of weak price movement. The world’s leading digital asset is trading at $9,072, in red with 24 hours ‘real’ volume of just...

Public Mint Launches Its Blockchain; Over 200 Banks Plan to Support Its Digital Money

vPublic Mint, a firm founded by CNET founder Halsey Minor, has announced the launching of its ‘fiat-native’ public blockchain, which enables anyone to easily...

BTC Halving Week Brings in Record Monthly New Accounts & Doubles the Revenue for BlockFi

The past two months have been incredibly dull for the price of bitcoin, but it didn’t affect the businesses in the cryptocurrency space. The...

Currencycloud Partners with Ripple to Leverage RippleNet for Efficient Cross-Border Payments

Currencycloud - one of the global payment processing giants - has become the latest member of the RippleNet family and would help ripple in...

Coinbase Custody and IOHK Partner to Provide Institutional-Grade Staking For Cardano's ADA in Q4

IOHK, the lead developer of Cardano blockchain, and Coinbase Custody, the institutional-grade custodian launched by Coinbase Inc., announced a partnership to allow users to...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today