Ripple Labs is accused of creating a scheme using which it raised hundreds of millions of dollars through the sale of unregistered ripple tokens (XRP).
The accusation of violating the federal securities law and California laws was put forward by one of the XRP investors.
The lawsuit filed by Ryan Coffey argues that Ripple has essentially conducted an "endless ICO" that should be classified as an unrecorded securities offer as defined by both US Securities Act and the California Corporations Code. This boosted the demand for XRP, and thus increased profits from its sale. Ripple Labs always described XRP as a good investment, voiced optimistic price forecasts, and made XRP an integral part of corporate clients.
The claim is classified as collective, as filed on behalf of all investors who bought the XRP token after January 1, 2013.
Coffey alleges that the “defendants market XRP to drive demand and increase its price,” including offering a bribe to Gemini and Coinbase exchanges to list XRP.
The scandal weighed down on Ripple, bringing its market cap down by 5% to $32.26 billion. XRP was trading at $0.82.
