- A lawsuit has been filed against Ripple CEO, Brad Garlinghouse, and XRP II, LLC for alleged sales of securities.
- The suit claims that the defendants violated federal and California securities laws.
- Ripple argues that XRP shouldn’t be labeled as a security.
Ripple Labs Inc., its CEO Brad Garlinghouse, and subsidiary XRP II, LLC, are confronting a class action lawsuit filed in the Northern District of California.
Notably, the lawsuit alleges that the San Francisco-based fintech company violated federal and California securities laws by offering and selling the digital asset XRP without the necessary registration.
“The lawsuit claims that persons or entities who purchased XRP during the class period (July 3, 2017 to June 30, 2023) have the right to recover (a) the consideration paid for the XRP, with interest, if they retained the XRP, less the current price of the XRP or upon tendering the XRP, or (b) damages if they sold the XRP at a loss,” said the lawsuit.
See Also: Ripple CEO Brad Garlinghouse Says It “Makes Sense” To Have XRP ETF
The plaintiffs contend that Ripple engaged in the unauthorized sale of XRP, bypassing registration requirements that have been mandated by both federal and state securities laws.
Additionally, the lawsuit seeks to represent two distinct classes: the Federal Securities Claims Class and the California State Securities Claims Class, including individuals and entities who purchased XRP between July 3, 2017, and June 30, 2023.
On the other hand, Ripple and the co-defendants counter these allegations, asserting that XRP is not a security and, therefore, does not require registration.
The lawsuit comes at a time when Ripple secured a partial win in the legal action taken by the United States Securities and Exchange Commission (SEC), where the judge stated that XRP was not a security when sold to retail investors.
The SEC’s December 2020 lawsuit against Ripple alleges an unregistered securities offering of $1.3 billion through the sale of XRP.
See Also: Ripple Acquires Standard Custody & Trust Co. To Expand Service Offerings In The US
Ripple’s defense strategy revolves around the argument that XRP, primarily used for global transactions, should not be classified as a security.
The deadline for class action members to exclude themselves from the lawsuit is April 5, allowing individuals and institutions to pursue independent proceedings against Ripple for compensation.
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