Distributed ledger startup Ripple is facing another lawsuit over its XRP cryptocurrency.
According to CoinDesk, court records show that Vladi Zakinov filed a class-action lawsuit last week, naming Ripple Labs, XRP II (the company’s licensed money services business), CEO Brad Garlinghouse and 25 anonymous persons as defendants. The complaint was submitted to the Superior Court of California in San Mateo county.
Zakinov alleges that the XRP token is a security controlled by Ripple, and that he purchased XRP in January 2018 and “was damaged thereby.”
“XRP, despite its name as a ‘token,’ is actually a security under California law,” states the lawsuit. “In particular: (i) Ripple uses the funds it raised from the sale of XRP to fund its business ventures; (ii) the Company indiscriminately offers XRP for sale to the public at large; (iii) plaintiff and the Class (as defined herein) are effectively powerless to control the success of Ripple and XRP; and (iv) plaintiff and the Class members’ investment is substantially at risk and is without nay security.”
The filing added that Ripple and the other named defendants “were required to register XRP when offering or selling it,” but never did. In addition, the defendants “made a series of improper statements, which drove up the price of XRP.” While that helped Ripple receive greater returns from selling the token, investors lost money and could lose more.
A spokesperson for Ripple denied the lawsuit’s claims.
“This is just another example of an extortionist bringing forth an opportunistic suit that lacks merit. We feel confident that the claims regarding XRP are completely unfounded both in law and fact,” the representative said.
Earlier this month, it was revealed that two former U.S. Securities and Exchange Commission (SEC) officials are representing Ripple in another civil suit over whether XRP is a security. Mary Jo White, who had served as chairwoman, and Andrew Ceresney are representing the crypto firm in a suit filed by an investor per court records.