Investors accuse Ripple CEO brad Garlinghouse of selling 67 million XRP during 2017, which contradicts his statements about long-term storage of assets.
Recall that in may 2018, a class – action lawsuit was filed against Ripple-the company was accused of unregistered sale of XRP in 2013, violating state and Federal securities laws. Recently, this claim was supplemented with new claims from investors. They claim that Garlinghouse advertised XRP to potential investors while simultaneously trying to sell the coins.
According to investors, in 2017, Garlinghouse said that he took the position of” long-term Hodler”, which gave reason to believe that he would keep his assets in XRP for a long time. However, according to the participants in the lawsuit, despite their statements, the CEO of Ripple sold 67 million XRP in 2017, starting the liquidation of their assets within a few days after receiving them.
The lawsuit also States that all the available 100 billion XRP was created by Ripple “from scratch”. Moreover, each time XRP was created just before distribution for the purpose of speculative investments and did not have any functionality. The plaintiffs added that the price of XRP held by the defendants significantly exceeds the company’s profit.
Ripple’s main value proposition is XRP, which the company stores and sells. It depends on the promotion of coins, and investors buy them in the hope of making a profit, which directly depends on the actions of the company. The plaintiffs believe that Ripple and Garlinghouse distort the concept of XRP by calling this coin an “intermediate currency” so that it does not fall into the category of securities.
According to investors, information about the purpose of XRP is false, and the company’s statements do not contain significant information about the practical value of XRP, which is used to form the value of the asset. Therefore, the plaintiffs accuse Ripple’s management of failing to comply with securities laws and artificially increasing demand for XRP.
Ripple has repeatedly filed a motion to terminate the lawsuit against the company, stating that XRP is not a security. Recently, Garlinghouse explained that a significant part of the company’s profit is generated by the sale of XRP. In addition, Ripple technical Director David Schwartz said that the team is working on new ecosystem features, and it will soon be possible to create stablecoins based on XRP.