Ripple is the third most valuable cryptocurrency in the world, but it has been in a lawsuit from XRP investors. There was a lawsuit filed by XRP investors alleging that Ripple violated federal security laws and engaged in illegal securities trading. This has been going on for about 2 years now, and the case was dismissed because the plaintiff wasn’t able to make a strong enough case. The U.S Securities and Exchange Commission (SEC) had accused Ripple Labs of violating federal securities laws by selling its tokens without registering them as securities with the commission or providing buyers with specific disclosures about how they work, but a judge threw out that case in March 2018. Ripple’s XRP token is the third-largest cryptocurrency by market capitalization and had a drastic fall in value on the first week of September.
Ripple lawsuit Labs has been sued by Ryan Coffey, who accused Ripple’s XRP token of being an unregistered security that sold for almost four times its actual price. The lawsuit against Ripple Labs alleges that the company violated U.S securities law by selling billions of its virtual currency, known as XRP, to investors without registering with regulators. The lawsuit is about Ripple’s sale of XRP tokens. The suit alleges that Ripple violated US securities regulations by not registering XRP as a security with the SEC. Ripple has been fighting a lawsuit from an investor since the latter filed the suit last year. The lawsuit surrounds the question of whether or not Ripple Labs should have registered as a security with the U.S. Securities and Exchange Commission (SEC).
According to documents obtained by CoinDesk, Jed McCaleb, co-founder of Ripple Labs, created 100 billion XRP tokens before he transferred them to other members of the company’s board as part of a deal that was never finalized as it would have granted him an option on becoming chief executive. In other words, McCaleb used what could be considered “founders’ shares” to launch Ripple’s network and create its token. Ripple Labs has been sued twice in the past 2 years. The first lawsuit was filed by David Oconer. He alleged that Ripple Labs deceived him into investing more than $3 million into XRP, the cryptocurrency that it created and owned, back in 2013. The second lawsuit was filed by Ryan Coffey. He alleged that Ripple violated state and federal securities laws via unregistered sales of tokens to people living in Connecticut.