A resident from San Diego called 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.
Moreover, 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.
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From the court document dated May 3, Coffey bought 650 XRP at $2.60 per token around January 6 and sold them at approximately $1.70 per token around January 18. Coffey described:
[The lawsuit] arises out of a scheme by defendants to raise hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws.
He also claims that “these ICOs have become a magnet for unscrupulous practices and fraud.”
However, this is not to forget that the US Securities and Exchange Commission (SEC) has made it clear that digital tokens including XRP often constitute “securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration,” Coffey elaborated:
The XRP offered and sold by [the] defendants have all the traditional hallmarks of a security…However, [the] defendants did not register XRP with the SEC, and many of the representations [the] defendants made regarding XRP were designed to drive demand of XRP, allowing defendants to obtain greater returns on their XRP sales.
Last month, the SEC stated that both XRP and ether could be classified as securities. However, Ripple’s chief market strategist, Cory Johnson, told CNBC in early April:
We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.