Fake scheme of selling XRP tokens lands Ripple Mining Labs in troubled waters
Ripple Mining Labs Inc. that offers XRP tokens for payments has been hit by a lawsuit in the Superior Court of California. The case filed against them was for running a fake scheme. The startup raised enormous amount of money through the scheme. The amount is stated to be hundreds of millions of dollars by running an unregistered sale of their XRP tokens.
Ripple Mining has been hit by a lawsuit alleging that it led a scheme to raise hundreds of millions of dollars through unregistered sales of its XRP tokens https://t.co/otxqelBwoL pic.twitter.com/0ldz2gzDq9
— Bloomberg Crypto (@crypto) 4 May 2018
The company created billions of coins unexpectedly and suddenly and sold them to public. The fintech company profited through selling of the tokens to public in “what is essentially a never-ending initial coin offering.”
The plaintiff in this case is Ryan Coffey. Ryan Coffey is an investor who is seeking for the damage made through the unlawful scheme. Also, he is looking forward for a declaration stating that Ripple Labs and their CEO Bradley Garlinghouse sold unregistered securities.
Coffey had bought 650 XRP tokens for approx $2.60 each or $1,690 in the starting of January. He sold them after few weeks and lost around $551. In other words, the loss was 32 percent of the initial investment made by him.
Ryan Coffey is seeking justice on behalf of all the people who bought Ripple tokens under the scheme.
Ripple spokesman Tom Channick stated in an email, “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.” He further added, “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.”
U.S. Securities and Exchange Commission stated earlier in July that the companies which raise money through selling of digital assets must comply to the federal securities law.
Earlier also, companies have been given subpoena when it’s unclear whether the companies adhere to the SEC laws or not.
The plaintiff Coffey stated, “XRP is a security. Defendants themselves have recognized that XRP investors have a reasonable expectation of profit, and publicly touted XRP’s price performance on numerous occasions.”
The case registered in the court against Ripple is called “Coffey v. Ripple Labs Inc.”
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