Another securities fraud lawsuit has been filed against Ripple in California. David Oconer is the plaintiff seeking to have XRP classified as a security. The case was filed in California’s Superior Court naming Brad Garlinghouse and XRP as defendants. As proclaimed in the lawsuit, the way the XRP cryptocurrency is managed and distributed by Ripple Labs along with how the coin works with the Ripple product offering makes XRP a security. Consequently, the lawsuit claims Ripple Labs has violated securities law by selling it. Ripple Labs is also allegedly promoting their coin to increase it’s value. One method of price manipulation employed by Ripple is limiting distribution.
Ripple – Pumping The XRP Price
As per the lawsuit, last year in May the company disclosed that their distribution of nearly 62 billion XRP owned by Ripple would be limited. The company placed 55 billion XRP in an escrow account. According to the lawsuit, Ripple executives were active in promoting this fact to drive the price of distributed XRP up.
— Brad Garlinghouse (@bgarlinghouse) December 8, 2017
The suit goes further to claim that, through limiting supply, the intended effect was achieved. One quote from the compliant reads,
“Ripple’s public commitment to limit the supply of XRP had its intended effect. In the weeks that followed, the price of XRP rapidly increased, from approximately $0.22 per token on December 7, 2017 to $3.38 per token on January 7, 2018,”
This is the third class action lawsuit to be filed against Ripple. Last month, Vladi Zakinov filed a claim against the company on the basis that they should have registered XRP as a security. This is because the coin was under control of Ripple Labs at the time of the sale. This, in turn, manipulated XRP’s price.