Stratup Ripple Labs is involved in one more class action lawsuit. A class suit was filed in The California Supreme Court in San Mateo County against the startup Ripple Labs, XRP II, and its CEO Brad Garlinghouse, as well as 25 others. Plaintiff Vladi Zakinov claims that XRP tokens are unregistered securities, and he, having invested funds in January this year, together with other investors is a victim.
Ripple Faces Second Lawsuit. XRP Is a Security?
Zakinov suggested that the court pay attention to the fact that the project openly offers securities to the public as tokens, ignoring the need for their registration. He claims that the funds from XRP sale are used to finance the company, while investors are exposed to significant risks and can not control Ripple and XRP.
Vladi Zakinov used Ethereum to buy XRP tokens, buying 162 XRP at $14,337 and 57 XRP at $1365 in January 2018. At that time the price was at $1 and above. Later, the plaintiff bought 299 XRP at $10923 on January 27th. The claim states that the plaintiff invested in XRP with expectations about future additional price increases, with allegations that Ripple Labs have “promoted XRP and conflated the value of XRP with other software efforts”.
The plaintiff states:
“XRP, despite its name as a ‘token,’ is actually a security under California law. In particular: (i) Ripple uses the funds it raised from the sale of XRP to fund its business ventures; (ii) the Company indiscriminately offers XRP for sale to the public at large; (iii) plaintiff and the Class (as defined herein) are effectively powerless to control the success of Ripple and XRP; and (iv) plaintiff and the Class members’ investment is substantially at risk and is without nay security.”
The Ripple Labs has already called all allegations an unjustified extortion. Representatives of the company noted that they can confirm their position, guided by the letter of the law.
“This is just another example of an extortionist bringing forth an opportunistic suit that lacks merit. We feel confident that the claims regarding XRP are completely unfounded both in law and fact,” the representative said.
Previous Lawsuit against Ripple
We recall, a similar lawsuit against Ripple Labs was filed by Ryan Coffey and law firm Taylor-Copeland a month ago. Investors who bought Ripple tokens at the beginning of the year, lost some of their investments due to a sharp decline of XRP rate. Ryan Coffey also claims that XRP is a security. The lawsuit is still ongoing.
XRP rate reacts negatively. At the time of writing XRP price is $ 0.63. On the other hand, all cryptocurrencies are in the red zone.
Meanwhile, Ripple continues to enjoy the support of large financial companies. Cryptocurrency analysts are taking the position that during the June the XRP rate will increase rather than decrease.