Ripple has been sued yet again over allegations that it breached US securities law with the sale and marketing of its XRP cryptocurrency. The new lawsuit alleges that the defendant conducted unfair and fraudulent business practices in violation of California law.
This new suit comes as the company is still knee-deep in another class-action lawsuit filed by enraged XRP investors.
Ripple Faces Another Class-Action Lawsuit
The legal team for a company known as Bitcoin Manipulation Abatement LLC has filed a class-action lawsuit against Ripple and its CEO Brad Garlinghouse for the alleged sale of unregistered securities.
The new peculiar plaintiff claims that Ripple created XRP with the main aim of enriching its founders and a few other people.
The plaintiff also accuses the blockchain payments firm and Garlinghouse of raising over $1 billion by marketing XRP to the public, per court documents filed on Friday, May 1. For the purpose of boosting the demand for XRP, and subsequently maximizing the profits from the sales, Ripple and Garlinghouse “made a litany of false and misleading statements regarding XRP”.
The plaintiff further claims that Ripple and Garlinghouse violated California’s securities law, and false advertising and unfair competition laws. As such, the plaintiff, Bitcoin Manipulation Abatement LLC is seeking damages and restitution regarding the stated violations.
Notably, Bitcoin Manipulation Abatement LLC also filed a class-action lawsuit against Hong Kong-based crypto derivatives exchange FTX in November of last year. The $150 million suit accused FTX of market manipulation, unlicensed securities sale, among others, but was dismissed a month later by a judge of the US district court in California.
XRP’s Security Status Still a Gray Area
It’s no secret that Ripple has been hit with several class-action lawsuits over the years. A key element common in a majority of these lawsuits is whether or not XRP should be classified as a security under US law. Ripple executives have, however, vehemently refuted the thesis that XRP is a security, even citing that such a classification would upend Ripple and the XRP token. Nonetheless, plaintiffs have insisted that XRP has all the hallmarks of a security based on how it was marketed and sold.
The ongoing lawsuit led by XRP investor Bradley Sostack is also seeking compensation for incurred losses because XRP is a security and Ripple and Brad Garlinghouse violated the law by distributing and selling an unregistered security.
Suffice to say, the United States SEC is yet to take a stance regarding XRP’s security classification.