A Florida resident filed a class-action lawsuit against Ripple Labs after losing a mere $48 investing in xrp last year.
Another Day, Another Lawsuit
Florida resident, Tyler Toomey, filed a class-action lawsuit against Ripple Labs and CEO Brad Garlinghouse in a U.S. District Court in the Middle District of Florida.
In the suit, Toomey alleges both Ripple Labs and Garlinghouse sold Florida residents xrp in violation of the State’s securities laws. Toomey invested just under $100 in xrp in November last year, paying $0.72 per coin.
When news of another lawsuit against Ripple Labs broke, xrp lost 60% of its value. Toomey sold his investment for a 50% loss, roughly $48.
According to Florida law, the suit alleges that xrp is classified as a security, so any sale must be registered with a state regulator. Toomey claims this did not occur, therefore Ripple Labs and Garlinghouse broke the law.
The suit goes on to allege Garlinghouse and other executives benefited immensely from these sales “to the tune of $600 million.” Since it’s designated as a class-action lawsuit, it enables others to join Toomey in pursuing the claim.
The Case Continues
This case bears a striking resemblance to a complaint filed last year by the U.S. Securities and Exchange Commission (SEC) in New York. The December complaint alleged that Ripple Labs and its top executives participated in the illicit sale of securities to investors over a period of seven years.
The company and those executives used the sales to finance company activity and enrich its leadership, the suit went on to claim. The SEC’s case hinges on the designation of xrp as a security, a claim both Ripple Labs and Garlinghouse disagree with.
When the SEC filed the complaint, the market reacted quickly, prompting a 60% xrp sell-off in less than 24 hours. Cryptocurrency exchanges also acted on the news, with several suspending xrp trading pending the case.
Nevertheless, Garlinghouse came out fighting, calling the SEC’s move an attack on crypto.
What’s Next for XRP?
In less than a month, the two parties to the New York case, Ripple Labs (and co.) and the SEC, will come face-to-face for the first time. Many in the cryptocurrency community will look to the February 22nd conference to see whether the case can be settled before trial.
These include xrp investors, who will undoubtedly be making final decisions as to their holdings very soon. It also includes exchanges and Ripple partners who will have to decide whether they can relist xrp and work with the company going forward.