Ripple Sued by Investor After Seeing a Loss of $889, Claims XRP is Security

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Ripple Labs and its CEO Brad Garlinghouse were sued by a Ripple investor earlier this week in the state of California. The official document of the lawsuit revealed that the investor is suing Ripple based on the premise that XRP should be considered a security.

Security Claims

Ryan Coffey, the lead plaintiff of the lawsuit, stated in the document that he had purchased 650 XRP on January 6, 2018 at a rate of $2.60 per XRP and sold the XRP that he had bought for $1.70 per XRP merely 12 days later. Coffey bought $1,690 worth of XRP and sold it 12 days later at a loss of $889.

Coffey claimed that the Ripple blockchain protocol’s native token XRP should not be traded on major cryptocurrency exchanges, because unlike bitcoin and Ethereum, XRP is not mineable and was wholly created by Ripple Labs. The lawsuit alleged Ripple Labs for violating securities regulations by distributing XRP on major exchanges.

“Unlike cryptocurrencies such as Bitcoin and Ethereum, which are mined by those validating transactions on their networks, all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013. n other words, unlike some virtual currencies, XRP was fully generated prior to its distribution. 20 billion XRP, or 20 percent of the total XRP supply, were given to the individual founders of Ripple Labs, with the remaining 80 billion retained by Ripple Labs,” the lawsuit read.

The plaintiff also alleged Ripple for bribing Coinbase and Gemini, two of the biggest cryptocurrency brokers and exchanges in the US, to be listed on their platforms, claiming that the investors of XRP should be compensated for their losses given that Ripple Labs engaged in bribery and illcit distribution of securities.

“Defendants also reportedly offered to bribe popular U.S.-based cryptocurrency exchanges Coinbase, Inc. (“Coinbase”) and Gemini Trust Company, LLC (“Gemini”) to list XRP. In or about the fall of 2017, Ripple Labs is reported to have offered Coinbase more than $100 million worth of XRP to start letting users trade XRP. A Ripple executive is also reported to have asked whether a $1 million cash payment could persuade Gemini to list XRP in the third quarter of 2017,” the plaintiff claimed.

Questionable Arguments

Essentially, the lawsuit of Coffey argues that the US Securities and Exchange Commission (SEC) should consider XRP a security and should crackdown on the distribution of XRP. But, Ripple has been cooperating with the largest consortium of banks globally, with more than 100 banks from Japan and South Korea led by SBI Holdings, and major banks from the US and Europe including Barclays.

The lawsuit claims all of these banks have also engaged in illicit distribution of securities and suggests that all of the cryptocurrency exchanges in the global market such as Binance and Bitfinex should be punished accordingly.

But, the basis of the lawsuit is on the $889 loss of an individual investor who purchased XRP at his own risk on a public trading platform. Due to the sensitivity of the accusations brought upon by the plaintiff and the premise of the lawsuit surrounding a $889 loss in an individual trade led investors and analysts in the cryptocurrency market to disregard the case and suggest that the investor is carrying out a desperate attempt to target a multi-billion dollar company with a trivial lawsuit.

13 COMMENTS

  1. The guy is clearly a moron. I bought some xrp at $3, far worse than his £2.60….and so far I have lost exactly nothing….

  2. What an idiot. First off, even if it was a security, he only LOST money because he bought high and sold low, a stupid thing to do, and certainly not anybody elses fault. Ripple may not ever shoot to the moon, but it will certainly be at the high point this idiot bought it at.
    He is basically sueing because he tried to make some money and failed to do so because he doesn’t know what he is doing.
    Secondly, his argument against Ripple itself is ridiculous, since Ripple never asked anybody to buy XRP as an investment OR a security. It is clear that Ripples purpose is to be a transient medium for bank to bank trade, and a better way to trade internationally. They are not out there asking for anybodys help or investments, and in fact, you could make the argument that speculators who drive price changes are a pain in the butt to the Ripple project since their business model is to facilitate trade, not increase the value of the trade medium which can only complicate their ultimate goal of an almost lossless trade, fast, stable trade medium.
    This guy doesn’t have a chance of winning, whether XRP was considered a security or not.
    Databyter

  3. What a fucking loser, crook and IDOT himself by knowing Ripple is a scam and still buy into scam after being scammed then try pull a scammer scam trick. If he and other idiots refuse to play into such a scam, the scam itself will fold itself over a period of time.

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