Ripple and XRP have come under scrutiny of late, mainly for XRP’s association as a security, something that authorities are still debating as we speak. For one half of Ripple’s services, the cross-border payment systems and xVia, xCurrent and xRapid, news is as good as ever, for XRP however, we are starting to see more and more challenges arise, challenges that look to be having an impact on the value of XRP.
At the time of writing, XRP is valued at $0.821 and is down 0.33%. All in all, the value of XRP isn’t so bad, however, with news of a lawsuit against Ripple, maybe we should start to question if this will have an even bigger impact on XRP’s inability to breach the $1.00 mark it has thus far failed to hit, due to strong resistance met at $0.90.
According to FinanceMagnates.com, Ryan Coffey has filed a class action lawsuit against Ripple, suing Ripple Labs for “the unregistered offer and sale of securities”. Coffey believes that XRP is an unregistered security that is being used to raise money off the back of other investors, himself included.
It is reported that this, stems from Coffey losing $551.00 to Ripple through recent investments.
Coffey argues that Ripples XRP tokens have been created out of nothing and are being retained by both Ripple Labs and people associated with Ripples services, essentially pin pointing the roll out of XRP as an initial coin offering, with no end date set. According to FinanceMagnates.com:
“Key to the argument is that the XRP tokens are not actually related to the products which give Ripple value. The document states: “While publicly touting its xCurrent, xRapid, and xVia enterprise solutions (collectively, “Ripple Enterprise Solutions”), Ripple Labs’ primary source of income is, and has been, the sale of XRP. Defendants earned over $342.8 million through XRP sales in the last year alone—XRP which costs Defendants nothing since they created it out of thin air.”
This relation to securities is of course something Ripple are trying to avoid, namely because it is this association that is preventing Ripple from gaining listings on major cryptocurrency exchanges such as Coinbase.
This of course could see the start of something far more troubling, as the SEC could very well see this as a first step towards carrying out enforcement operations on Ripple, should the lawsuit be a success for Coffey, at least.
To refer back to Tom Channick of Ripple Labs:
“Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security.”
The result of this lawsuit may have a big impact on Ripple and XRP. Though it does seem to be part of a petty war between Coffey and Ripple labs, the claims Coffey is making could prove to be quite damaging to the value and progression of XRP. As a currency that really does strive for mainstream adoption, bad publicity needs to be avoided at all costs.
Let’s hope XRP’s performance manages to stay away from this rare bit of bad news for the Ripple team.