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A modified claim against Ripple was filed by XRP investors in a long-standing lawsuit involving allegations of violation of US securities law.
The two-year class action – which claims that Ripple, a blockchain payment infrastructure company, violated the rules on securities with its sales and marketing of the cryptocurrency XRP – was overturned with further claims to support the case that Ripple and the its CEO, Brad Garlinghouse, had engaged in unfair or fraudulent business practices.
The lawsuit, with former XRP investor Bradley Sostack as the lead actor, was filed on behalf of all investors who bought XRP (XRP) tokens issued and sold by Ripple. He claims a scheme to raise hundreds of millions of dollars through the sale of an unregistered stock, XRP, to retail investors.
According to a court document filed March 25 (see below), a sixth compensation claim alleges false advertising in violation of California commercial law. Specifically, this amendment appears to see plaintiffs cover up their original case, stating that this claim is advanced “under the alternative theory that XRP is not a title”.
A further seventh indictment further accuses the company of unfair competition in violation of California law, also based on the theory that XRP is not a stock.
The amendments appear to be aimed at inserting the “alternative theory” into the case in the event that the judge rules that Ripple has not issued and sold an unregistered security.
The other noteworthy changes to the lawsuit target Ripple and Garlinghouse, citing their claims that XRP is an essential utility token for international payments and that sales are primarily for market makers.
“However, as discussed above, over 60 percent of XRP is owned by Ripple and none of these XRPs are used for anything other than to be sold in the future for investment,” the plaintiffs say.
It also strikes Garlinghouse’s claims that it was “XRP very, very, very long” and “was” on HODL’s side “- holding XRP for long-term gains.”
This, the filing states, “was false when it was done as throughout 2017 Garlinghouse sold millions of XRPs on various cryptocurrency exchanges. The XRP ledger review indicates that Garlinghouse sold at least 67 million XRPs in 2017 and that it has sold any XRP received by Ripple within days of receipt. “
Plaintiffs had the option to decline modified requests under California law within 28 days of the previous ruling. US District Judge Phyllis Hamilton in the Northern District of California ordered in February that the lawsuit could proceed to trial. The action may include claims filed under federal law, but Judge Hamilton has denied some claims filed under California state law, urging refiling.
The order followed a hearing held in mid-January between the plaintiff, Bradley Sostack and the defendant, Ripple, his XRP II subsidiary and CEO, Garlinghouse.
