A class action lawsuit has been filed against Ripple Labs, its CEO, and subsidiary. The plaintiff alleges that the defendants have violated the state and federal securities laws, engaging in schemes to raise hundreds of millions of dollars through the sale of unregistered ripple tokens (XRP).
San Diego resident Ryan Coffey has filed a “securities class action” lawsuit against Ripple Labs Inc, its CEO Bradley Garlinghouse, its wholly owned subsidiary XRP II LLC, and ten related persons. Attorney James Taylor-Copeland representing Coffey filed the lawsuit with the Superior Court of the State of California, seeking damages on behalf of Coffey and all others similarly situated.
Coffey detailed in his filing, “unlike cryptocurrencies such as bitcoin and ethereum…all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013.”
Citing that 20 billion tokens were given to Ripple Labs’ founders and 80 billion to the company itself, he alleges that the defendants “earned massive profits by quietly selling off this XRP to the general public,”.
He also claims that “these ICOs have become a magnet for unscrupulous practices and fraud.”
Coffey alleges that the “defendants market XRP to drive demand and increase [its] price,” including “blur[ring] differences between Ripple Labs’ Enterprise Solutions and XRP.” Other tactics include offering a bribe to Coinbase and Gemini exchanges to list XRP and promising R3, an enterprise software firm with a network of banks and financial institutions, a 5 billion XRP option, Coffey added.
At the time of this writing, XRP is trading at $0.91 on Bitfinex, a 73% drop from its high of $3.30 in January.