Investors accuse Ripple CEO of selling 67 million XRP
Investors accuse Ripple CEO Brad Garlinghouse of selling 67 million XRP during 2017, contrary to his claims for long-term asset storage.
Recall that in May 2018, a class action lawsuit was filed against Ripple – the company was accused of unregistered sale of XRP in 2013, which violates state and federal securities laws. The other day, this lawsuit was supplemented by new claims by investors. They claim that Garlinghouse advertised XRP to potential investors while trying to sell coins.
According to investors, in 2017, Garlinghouse said that he took the position of a “long-term hodler,” and this gave reason to believe that he would keep his assets in XRP for a long time. However, according to claimants, despite their allegations, the CEO of Ripple sold XRP 67 million in 2017, starting the liquidation of his assets within a few days after they were received.
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The lawsuit also indicated that all of Ripple’s 100 billion XRPs were created “from scratch.” Moreover, each time XRPs were created immediately before distribution for the purpose of speculative investments and did not have any functionality. The plaintiffs added that the price of XRP owned 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, calling this coin “intermediate currency” so that it does not fall into the category of securities.
According to investors, the information about the purpose of XRP is false, and the company’s statements do not contain significant information about the practical value of XRP, on the basis of which the value of the asset is formed. Therefore, plaintiffs accuse Ripple management of non-compliance with securities laws and artificially increase demand for XRP.
Ripple has repeatedly filed a motion to terminate the lawsuit against the company, stating that XRP is not a security. Garlinghouse recently explained that a significant portion of the company’s profits comes from the sale of XRP. In addition, Ripple CTO David Schwartz said the team is working on new ecosystem features and will soon be able to create stablecoins based on XRP.