Ripple Labs, which issuing the XRP cryptocurrency, took a fresh hit with another class action filed on behalf of Florida-based plaintiff Tyler Toomey.
The plaintiff accuses the blockchain company of violating the Florida Securities and Investor Protection Act by offering XRP to retail investors without any restrictions.
According to the case file, Ripple’s inability to cover corporate business expenses forced the so-called token to sell “as widely as possible” and to control its supply and liquidity:
“IN OTHER WORDS, THE SUSPENSIVE MAJORITY OF RIPPLE’S REVENUE COMES FROM XRP SALES (OVER 1 BILLION DOLLARS) AND RIPPLE RELEASED ON THESE SALES TO FINANCES ITS OPERATIONS.”
Tyler Toomey says he lost more than half of his small investment of about $ 100 in XRP tokens between the acquisition on November 24, 2020 and the sale in two transactions between December 7 and December 28. The lawsuit also calls Ripple CEO Brad Garlinghouse an individual defendant and claims that while manipulating the token’s performance, he sold about $ 150 million worth of XRP from April 2017 to December 2019:
“AT VARIOUS TIMES BETWEEN APRIL 2017 AND DECEMBER 2019, GARLINGHOUSE PAUSED XRP SALES BECAUSE THE MARKET PRICE OF XRP DROPPED TO AVOID REDUCING THE MARKET PRICE OF XRP.”
Although Garlinghouse said he has long been in XRP on CNBC and predicted in a Bloomberg interview that the market value could potentially reach “trillions of dollars”, he made a fortune with his persistent sales:
“GARLINGHOUSE WAS AN ESPECIALLY INSISTED WORD OF RIPPLE’S MARKETING EFFORT OF XRP AS AN INVESTORS WHICH INVESTORS CAN MAKE PROFITS POTENTIAL. WHILE SELLING MILLIONS OF XRP, GARLINGHOUSE FREQUENTLY TELLED INVESTORS THAT IT IS INVESTING IN XRP AND IS A BULL ON INVESTMENT. ”
Ripple Labs was brought up in a similar class action lawsuit filed by lead plaintiff Bradley Sostack in May 2018. The case has been going on for almost three years.
Ripple’s legal problems got much worse after they were sued by the US Securities and Exchange Commission (SEC) in December. On top of that, Ripple was sued by major asset manager Tetragon, who tried to reclaim its equity in the company after leading the Series C funding round in December 2019.