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A Puerto Rico-based company dubbed Bitcoin Manipulation Abatement LLC has filed this recent lawsuit accusing Ripple of misleading investors of financial gains making false claims and driving false demand. The plaintiff argues that XRP isn’t a currency.
Trouble for Ripple Labs for its selling XRP cryptocurrency doesn’t seem to be ending anytime soon. In yet another fresh lawsuit, Ripple faces accusations of selling XRP token as unregistered securities. The lawsuit alleges that Ripple’s XRP digital currency has no real use case.
A Puerto Rico-based company dubbed Bitcoin Manipulation Abatement LLC has filed this recent lawsuit in the Northern California District Court. The company said that it seeks to recover damages caused due to the sale of unregistered securities. the court document clearly mentions the plaintiff’s claim of XRP being a security.
The plaintiff argues that XRP isn’t a currency because one can’t purchase any products and services with it. It thus holds Ripple Labs accountable for selling XRP without proper registration with the authorities. The plaintiff states:
“XRP is a security because the purchasers were led to believe they could expect a profit and were told that XRP would be a long-term growth asset.”
The lawsuit also claims that Ripple Labs created its 100 billion XRP tokens out of thin air. It then publicly sold them to investors to spark up demand and maximize profits. It also states that Ripple misled investors through false announcements to “artificially inflate the price at which they can sell XRP”.
The plaintiff claims that since XRP had no utility during its first sale in 2013, the $1.1 billion made by Ripple through token sale was more than the company’s total revenue and cash flow. Besides, the plaintiff also criticized Ripple for locking 80% in escrow initially and selling it programmatically.
Not the First Lawsuit for Bitcoin Manipulation Abatement (BMA), Recent XRP News
The Puerto Rico-based BMA is a very new company in the cryptocurrency space formed last year in March 2019. Pavel Pogodin is the only director of the company having a corporation registry. BMA first came in news in November 2019, when it filed a lawsuit against derivatives exchange FTX. BMA accused the exchange of manipulating BTC prices. However, the case was discontinued after mid-December 2019.
The filing reads that Pogodin purchased XRP from Ripple, however, lost money by replying majorly on Ripple’s “misrepresentations” that the “adoption of XRP by financial institutions and banks would drive demand for XRP”.
It also alleged that Ripple did false advertising and promoted unfair competition laws. Thus, it claims that Ripple’s statements were misleading and in complete violation of California’s securities laws. Well, it will be interesting to see how the case proceeds further. On the other hand, troubles for Ripple’s XRP investors seem to be mounting.
Earlier this week, report of Ripple co-founder Jed McCaleb liquidating his XRP holdings, emerged. As per reports, McCaleb sold 54 million XRP tokens in April 2020 valued at a total of $11 million.