A group of investors filed a new lawsuit against Ripple, which argued that the company had violated the securities laws in the sales process token XRP.
By Doc on Scribd ForkLog
So, filed 5 Aug updated lawsuit in the case, which has been ongoing for more than a year, contains some new arguments about the Ripple violation of U.S. law. The company must respond to the allegations until 19 September. With four previous suits were consolidated and transferred to Federal court.
According to the lawyer Jake Czerwinski in a court document provides an explanation of why the XRP should be considered as securities at the Federal level and in California.
«This is important because California is not only a test for Howie, but the risk capital test for determining whether operation under the law on securities», — said the lawyer.
Czerwinski added that the risk capital test is somewhat broader in nature than the test Howie. Thus, the plaintiffs might lose the case at the Federal level, but winning at the state level.
One of the most important differences of the new claim from the previous is in reference to the leadership of the SEC to determine whether a particular asset a security.
«For the first time the SEC guidance applies to Federal lawsuit», — said the partner of the law firm Fisher Broyles Rebecca Rettig.
According to the plaintiffs, buying XRP is an investment in the joint venture.
«The XRP investors had a reasonable expectation of profit. XRP success depends on the efforts of Ripple and other participants», — says the lawsuit.
The document also stated that to buy XRP investors «used cryptocurrencies such as bitcoin and Ethereum».According to the plaintiffs, the investments in Fiat and digital currencies satisfy the first aspect of the Howie test.
The document mentions some of the statements made by the CEO of Ripple brad Garlinghouse and technical Director of a startup by David Schwartz. So, in 2017, Arlinghaus in conversation with CNBC, stated the following:
«People look at Ripple as a successful company, and I think it increases the value of XRP»
According to Czerwinski, these statements prove that XRP investors had a reasonable expectation of profit.
The document contains around 40 tweets, including statements of the company, its managers and other employees of the Ripple. They discussed the reserves of XRP, listings on stock exchanges and various marketing questions.
«I’ve never seen the claim so many Twitter-citations», — said Czerwinski.
In addition to the issues related to securities, the complaint contains other claims.
«First, the plaintiffs claim that Ripple violated California laws on false advertising and unfair competition, making fraudulent claims about the origin, the number of coins in circulation and the mass adoption of XRP», — said the lawyer.
According to the document, the plaintiffs demand from Ripple to compensate for the losses that they suffered due to investment in XRP. So, one investor claims to have lost $118 100.
However, perhaps most importantly, plaintiffs seek recognition of XRP securities, which may limit the ability to sell their Ripple tokens from the reserves.
We will remind, the other day brad Garlinghouse said that after investing in MoneyGram Ripple plans to enter into a variety of investment contracts and acquisitions of outside firms.