Ripple is facing another court battle in the US for selling XRP, which are unregistered securities. Bitcoin Manipulation Abatement LLC filed the new lawsuit on May 1 at a federal district court. The lawsuit claims that the company and Brad Garlinghouse, the CEO, raised over a billion dollars via the marketing and sale of Ripple, which amounts to defrauding investors.
The Details of the Lawsuit
According to the lawsuit, to increase demand for XRP and thus increase profits for Ripple, the defendants made various false claims and issues misleading statements about XRP. It adds that the statements violated securities laws in California. Besides that, the lawsuit accuses Ripple of false advertising and violation of unfair competition laws. It adds that the defendants have seen made huge profits through the sale of XRP and have earned about $1.1 billion in XRP.
It is not the first time that Ripple and Garlinghouse have been sued over the sale of XRP, which the lawsuits claim are unregistered securities created from nothing. The lawsuits claim that XRP has no real purpose except making a small group of people extremely rich.
The Company behind the Lawsuits
Bitcoin Manipulation Abatement is also the firm behind a $150 million lawsuit against FTX, a crypto derivatives exchange. In the lawsuit, the firm accused FTX of price manipulation. Additionally, the firm dragged Binance’s name into the lawsuit. However, a judge quashed all charges against FTX and Binance and the lawsuit was dismissed. While it has been involved in some of the largest lawsuits in the crypto world, very little is known about the firm itself.
Unlike other decentralized cryptocurrencies such as Ethereum and Bitcoin, the management of XRP is very centralized. Ripple, which the company that created XRP, controls a huge chunk of XRP. Currently, various financial institutions for cross-border transactions use XRP. As a result, it is easier to file a lawsuit against XRP since there is a central body behind the crypto coin.
It is not the first time that the Ripple foundation has been sued for XRP being classified an unregistered security. Various lawsuits have been filed against the company accusing it of selling unregistered securities.