Some investors have filed an amended complaint in their lawsuit against the Blockchain firm, Ripple. The refiled two-year class action now includes new allegations that add weight to the investors’ claim of fraudulent practices by Ripple and its CEO, Brad Garlinghouse.
The new claims assert that XRP is an unregistered security. As such, Ripple’s scheme to raise funds was an unfair undertaking that defrauded investors of hundreds of millions of dollars.
Latest filling is sixth claim against Ripple
The suit against Ripple was initially brought to court by former XRP investor Bradley Sostack as lead plaintiff, acting on behalf of all others that bought the XRP tokens. The initial claim alleged that the firm violated the United States securities rules with their sale and marketing of the digital asset, XRP. Since then, the plaintiff has introduced new allegations amending the filing to strengthen their accusations against the firm and its management.
The latest filing made against Ripple and its CEO on March 25 was the sixth amendment to the long-running lawsuit. It alleges that the sale of XRP tokens was conducted through false advertising, which violates California business law. In terms that are more specific, the plaintiffs make this new claim “under the alternative theory that XRP is not a security.”
On top of this, the plaintiffs made a seventh claim accusing Ripple of unfair competition in violation of California law. Similarly, this claim is also made under the theory that XRP tokens are not securities.
New claims focus on alternative theory
The focus of the new filings is the alternative theory with the plaintiffs seeking to hedge their original case by asserting that XRP is not a security. In this regard, the new filings include direct citations from Garlinghouse stating that XRP was a utility token for facilitating cross-border settlements. As such, the primary target for token sales were market makers. This informed the new amendments with the plaintiffs stating,
“However, as discussed above, more than 60 percent of XRP is owned by Ripple and none of that XRP is used for anything at all, other than to be sold in the future to invest “
The new filings also cite Ripple CEO initial claims that he was a long-term XRP investor interested in the long-term gains from the project. However, Garlinghouse stands accused of selling about 67 million XRP in 2017, which contradicts such utterances. Moreover, the claims purport that Garlinghouse consequently sold any XRP that he received from Ripple just days after their reception.