Distributed ledger startup Ripple has been named in yet another lawsuit tied to the XRP cryptocurrency, court records show.
Investor Vladi Zakinov filed a class action lawsuit on Tuesday, naming Ripple Labs, XRP II – the company’s licensed money services business – CEO Brad Garlinghouse and 25 anonymous persons as defendants. The complaint was submitted to the Superior Court of California in the county of San Mateo.
Zakinov’s claim centers around the allegation that the XRP token is a security controlled by Ripple. The suit states that Zakinov bought XRP in January 2018 and “was damaged thereby.”
He argued in the complaint:
“XRP, despite its name as a ‘token,’ is actually a security under California law. In particular: (i) Ripple uses the funds it raised from the sale of XRP to fund its business ventures; (ii) the Company indiscriminately offers XRP for sale to the public at large; (iii) plaintiff and the Class (as defined herein) are effectively powerless to control the success of Ripple and XRP; and (iv) plaintiff and the Class members’ investment is substantially at risk and is without nay security.”
The filing went on to assert that Ripple and the other named defendants “were required to register XRP when offering or selling it,” but they did not. Further, the suit claims, the defendants “made a series of improper statements which drove up the price of XRP,” which helped Ripple receive greater returns from selling the token.
However, the suit continues, the investors lost money – and have the potential to continue losing money – because XRP owners cannot control Ripple.
A spokesperson for Ripple strongly pushed back against the lawsuit’s claims when reached.
“This is just another example of an extortionist bringing forth an opportunistic suit that lacks merit. We feel confident that the claims regarding XRP are completely unfounded both in law and fact,” the representative said. A request for comment sent to Zakinov’s attorneys was not immediately returned.
Ormer Securities and Exchange Commission officials – chairwoman Mary Jo White and enforcement head Andrew Ceresney – were representing Ripple Labs in another class action lawsuit filed in May by investor Ryan Coffey. That case also alleged that XRP is a security, and court records show that the case is still ongoing.