Ripple Labs, the official title of the company behind XRP and xCurrent etc are alleged to have been issued with yet another lawsuit on the premise of securities fraud according to reports out yesterday afternoon.
Ripple are under investigation through their ownership of XRP, the currency native to the Ripple technology. Because Ripple own a large amount of XRP, many deem that XRP as a currency does match the characteristics of a security which in turn would mean that Ripple have engaged with security fraud. Of course, the majority of us don’t believe that XRP is a security but overall, this is not stopping people from trying to take action against the company.
According to The Next Web:
“In this latest suit, dated June 27, a private XRP investor alleges that Ripple Labs Inc. and its CEO Bradley Garlinghouse have conflated their token with its proprietary Ripple technology and even illegally profited from price increases the whole time.”
“The court documents specifically point to Ripple’s publicized move to place 55 billion XRP tokens in escrow as a means to ‘ensure certainty of total supply’. This was seen as a means of reassuring investors that Ripple’s majority control of the total circulation would not be abused by sudden, large sell-offs – instead, it is alleged they were just selling tokens slowly and quietly.”
See the full article for yourself, here- https://thenextweb.com/hardfork/2018/07/04/ripple-securities-fraud-lawsuit/
This is especially bad news for Ripple and may reflect badly on XRP in the coming days and weeks. Overall, the association of XRP as a security is damaging for Ripple. One reason for this is simply that XRP would benefit from a listing on Coinbase, an exchange that will not list securities and therefore, even the smallest hint of security-fever within Ripple and Coinbase won’t even dream of touching the currency for a listing.
As these lawsuits mature, decisions will need to be made. If authorities decide that XRP is a security then this will cause Ripple some very big problems. Moreover, this is something that Investors should start to worry about. Whilst we don’t think XRP is a security and whilst you may not think it either, we don’t know what evidence the authorities have and also, we can never predict what sort of decision they are going to make here. Really, it’s in their hands now.
As it stands, we expect to see more of these cases filed as it becomes trendy to try and sue Ripple. The sooner the authorities make their decision the better because if this is left to go on, some real damage could be done.