Class Action Lawsuit Against Ripple Alleges Sale Of Unregistered Securities

Law firm Taylor-Copeland law has filed a class action suit against Ripple Labs for the sale of unregistered securities, according to the official complaint filed yesterday, May 3.

The lawsuit targets Ripple, its subsidiary XRP II, and Ripple CEO Brad Garlinghouse, alleging that Ripple's sale of XRP tokens is a violation of U.S. securities laws.

According to the complaint, the plaintiff, an individual named Ryan Coffey, purchased 650 XRP on Jan. 5 and sold it on Jan. 18 of this year for USDT, which he then exchanged for USD, sustaining a loss of around 32 percent, or $551.89.

"XRP purchasers reasonably expected to derive profits from their ownership of XRP, and Defendants themselves have frequently highlighted this profit motive Given its reliance on sales of XRP, it is unsurprising that Ripple Labs aggressively markets XRP to drive demand, increase XRP's price, and thus its own profits."

The class action suits alleges that the defendants have violated both the Securities Act and the California Corporations Code.

In addition they request that the court declare the sale of XRP an unregistered securities sale and to prevent the defendants from further violating securities laws.

"We've seen the lawyer's tweet about a recently filed lawsuit but have not been served. Like any civil proceeding, we'll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security."

"Reddit users commenting on Ripple's subreddit page mainly offer negative comments about the viability of the lawsuit, with user sixhours8 writing"I lost money because I fomo'd" is pretty much the complaint.

At the end of April, former Goldman Sachs partner and U.S. regulator Gary Gensler said that he believes both XRP and Ethereum should be considered securities under U.S. law.

According to Gensler: "[t]here is a strong case for both of them - but particularly Ripple - that they are noncompliant securities.