UK-based investment firm Tetragon Financial Group has sued Ripple in an effort to force the redemption of its equity in stocks in the company.
According to an initial report from Bloomberg, the investment firm filed a complaint in the Delaware Chancery Court earlier this week. While the specifics are unclear because the complaint is under seal, corresponding filings show that Tetragon is looking to “enforce its contractual right to require Ripple to redeem” Series C stock which the firm bought in December 2019.
The company is also looking for the court to stop Ripple from being able to use any of its cash reserves or other liquid assets until their stock holdings are redeemed. As Ripple announced at the end of 2019, Tetragon was labelled as the leader of the $200 mln Series C fundraising round.
Ripple claims lawsuit has no merit
Ripple has responded to Tetragon’s suit by claiming that their argument has no grounds based on a clause in the investment agreement of 2019 which factored in the possibility of XRP being labelled a security by regulators.
“In Ripple’s Series C investment agreement, there is a provision that if XRP is deemed to be a security on a go forward basis, then Tetragon has the option of having Ripple redeem their Ripple equity. Since there has been no such determination, this lawsuit has no merit. We are disappointed that Tetragon is seeking to unfairly take advantage of the lack of regulatory clarity here in the U.S. The courts will provide this clarity and we are very confident in our position.”
Legal action left, right and centre
The past three weeks have been an absolute rollercoaster ride for Ripple as a company and XRP holders around the world. Ripple, its CEO Brad Garlinghouse and executive chairman Chris Larsen are facing a lawsuit from the US Securities and Exchange Commission (SEC) for allegedly conducting an unregistered security offering of the sale of XRP tokens from 2013 onwards.
Various cryptocurrency exchanges in the United States have either delisted or suspended trading of XRP on their platforms. Coinbase is facing a separate lawsuit for allegedly receiving commissions from illicit XRP sales going on the basis that the tokens are deemed to be securities.
A group of XRP investors have taken matters into their own hands to try and mitigate the fallout of the situation. The group has filed a petition in a US court to try and force the SEC to exclude its claim that tokens owned by investors are securities. Their petition makes an impassioned plea that acting SEC chair Elad Roisman change the SEC’s filing against Ripple, Garlinghouse and Larsen “to exclude the claim that the XPR owned by Petitioners constitute securities”.