The plaintiff accused the payment firm of violating the Florida Securities and Investors Protection Act by offering XRP to retail investors without imposing any restrictions.
Ripple is allegedly compelled to sell XRP as widely as possible while controlling its supply and liquidity due to its inability to afford its corporate business expenses:
“In other words, the overwhelming majority of Ripple’s revenue came from its sales of XRP (over $1 billion), and Ripple relied on those sales to fund its operations.”
Such as the SEC’s filing, the lawsuit also names the firm’s CEO Brad Garlinghouse as an individual defendant, alleging that he sold about $150 million worth of XRP between April 2017 and December 2019 while manipulating the price performance of the digital currency:
“At various times between April 2017 and at least December 2019, Garlinghouse also paused his XRP sales because XRP’s market price was falling, seeking to avoid driving down XRP’s market price.”
The CEO Brad Garlinghouse made a fortune with his persistent sales despite his claim that he was long on XRP on CNBC and predicting that its market cap could potentially reach “trillions of dollars” in a Bloomberg interview:
“Garlinghouse himself was a particularly persistent spokesperson for Ripple’s efforts to market XRP as an investment from which investors could potentially profit. While he was selling millions of XRP, Garlinghouse frequently told investors that he was invested in XRP, and that he was bullish on the investment.”
Meanwhile, Ripple Labs was hit with a similar lawsuit filed by lead plaintiff Bradley Sostack back in May 2018. The case has been dragging on ever since.
The legal challenges of the blockchain payment firm became complicated after it was sued in late December by the United States Securities and Exchange Commission (SEC) for the sale of XRP, as an unregistered security.
As if that’s not enough, SEC’s lawsuit also gave birth to another filing against Ripple by Tetragon. The major asset manager is seeking to redeem its equity in the payment firm after leading its Series C funding round back in December 2019.
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