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New Twist in XRP Lawsuit Forces Ripple to Respond in One Month

August 14, 2019

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A group of investors just filed an amendment to their lawsuit against Ripple, which accuses the San Francisco startup of selling XRP as an unregistered security.

The new filing is the first since Ripple successfully fought to have four cases against it consolidated in federal court, and forces the company to file a response by September 19th.

The amended complaint references the SEC’s recently released framework for determining whether a digital asset is a security.

According to the modified 11-page complaint, XRP is a security because the token’s purchasers “made an investment of money in a common enterprise.” The filing says XRP investors “had a reasonable expectation of profits,” and that “the success of XRP requires efforts of Ripple and others.”

The complaint also claims that XRP qualifies as a security under both federal and California state law.

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In California, the suit alleges Ripple violated the state’s false advertising and unfair competition laws by making misleading statements about the “genesis of XRP, the circulating supply of XRP, and adoption of XRP.”

The lawsuit also alleges Ripple executives issued statements that appear to suggest that XRP could be a security.

Ripple CEO Brad Garlinghouse mentioned during an interview with CNBC in 2017 that “people are looking at the success Ripple has been having as a company, and I think that’s increased the value of XRP.” 

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