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Ripple has already faced a similar case filed against it by the SEC, which alleges that the XRP token is a security and not a crypto asset.
According to this new lawsuit, Toomey alleges that the payment protocol company broke laws guiding securities in Florida with its failure to properly register with the financial authorities of the state and selling its XRP token to retail investors without any form of restriction.
The lawsuit filed in Florida accuses Ripple Lab of generating funds through its token sales to cover its operational cost. It was able to achieve this by selling the assets to various retail investors while also controlling its supply and liquidity.
Toomey acknowledges the fact that the crypto company was already facing a similar case filed against it by the Securities and Exchange Commission of the United States (SEC), which alleges that the XRP token is a security and not a crypto asset. However, he goes a step further when he says Ripple knew that the token was a security but deliberately chose to mislead investors that it was not.
Brad Garlinghouse, the CEO of Ripple, is an individual defendant in the law case. Garlinghouse was said to have sold almost $150 million worth of XRP between 2017 and 2019 and also lured more investors to the asset through different interviews he granted where he hyped up the token and predicted that its market cap could reach “trillions of dollars.”
The plaintiff lost over half of his investment in the XRP tokens between when he purchased them on Nov. 24, 2020, and his sale on December 7 and December 28, 2020.
Ripple and Its Lawsuits
Tyler Toomey lawsuit is not the only impending lawsuit that Ripple is facing. The crypto firm is also facing a class-action lawsuit that was filed against it by Bradley Sostack in 2018. At the same time, the firm is preparing to face the SEC lawsuit that is set for pre-trial by February.
Tetragon, a leading asset manager, has also filed a lawsuit against the crypto firm as it is looking to redeem its equity in Ripple. The asset manager had led a funding round in December 2019.
Due to the lawsuit filed by the SEC, the price of the XRP token tanked and major crypto exchanges like BitStamp and Coinbase have delisted the asset from their platform.
Ripple has, however, denied any wrongdoing against the authorities with the firm saying it was going to stand up against the SEC on behalf of the crypto industry. The firm has also, at different times, demanded that the authorities clarify the regulations guarding the crypto space.