Ripple Sued For Third Security Violation
During the previous week, reports revealed that a third lawsuit was issued against Bradley Garlinghouse, the Chief Executive Officer of Ripple and his company. A private investor claimed that the CEO combined the company’s technology with its native coin to increase its value and illegally gain from its spike in price.
Ripple’s framework is a centralized trading platform which continuously funds itself through an ongoing initial coin offering reported to have sold almost $100M Ripple coins in 2017. The three lawsuits against the company and CEO have opened up new discoveries regarding the shady nature of its funding with reports stating that Ripple coin sales soared over the actual income of the company.
If the lawsuits prove that Ripple has been illegally funding itself, this would violate its position as a non-security, which is determined by the Howey test, and shifts the tides of the cryptocurrency industry.
Both parties would also be charged with the illegal trade of securities worth millions as a result of allegations by prosecutors that Ripple promoted their currency through Twitter. Records highlighted Ripple’s agreement to shift 55 billion coins into contractual agreements to maintain its complete supply of tokens and instill confidence in investors that unplanned trades would not disrupt the system. The company was then accused of selling tokens under the table.
Announcing to the public markets that a massive amount of tokens would be withdrawn and relocated can have an unprecedented impact, and further investigation has pointed in the direction of the one thousand percent increase in Ripple coins following the public statement.
Should the lawsuits pass, Ripple will be forced to shut down its platform and services as well as face criminal charges while coin holders invested in the system might be fully refunded for their purchases.