One of the most popular Blockchain networks Ripple, the company behind the popular cryptocurrency XRP, has been involved in an on-going class action lawsuit against investor Bradley Sostak since May. The company was being accused of selling unregistered securities. Recent developments state that Ripple, in turn, has filed a motion to dismiss the lawsuit.
According to a court filing published by Fortune on September 20, the lawyers representing Ripple against the investor has completely dismissed the claims that were held against them. Ripple has denied these acquisitions, but what is more controversial is the relationship between Ripple and XRP. Even though the Ripple foundation has the highest shares of XRP, they have refused to recognize the token as a part of their company.
The Story so far
The lawsuit was initially filed in May 2018, where Sostak filed a class action lawsuit against Ripple Foundation and their chief executive officer Bradley Garlinghouse. Sostak, who has been acting as the lead plaintiff for not just himself but other traders as well, was previously suing the organization over his losses but the fresh SEC guidelines published on April 2019 added significantly to the case.
The latest reports suggested that a thorough investigation had been carried out by Sostak’s attorneys, and fresh evidence had been put in place and presented to the court. An excerpt of the filing states:
“Lead Plaintiff’s [Bradley Sostak] allegations herein are based upon personal knowledge as to himself and his own acts, and upon information and belief as to all other matters based on the investigation conducted by and through Lead Plaintiff’s attorneys, which included, among other things, a review of press releases, media reports, and other publicly disclosed reports and information about Defendants.”
The case now has two major parts in which one is the unregistered sale and the other being a violation of the California securities laws advertising and promotional policies. The Court document adds:
“It arises out of a scheme by Defendants to raise hundreds of millions of dollars through sales of XRP—an unregistered security—to retail investors in violation of the registration provisions of federal and state securities laws. Additionally, in order to drive demand for and thereby increase profits from the sale of XRP, Defendants have made a litany of false and misleading statements regarding XRP in violation of California’s securities laws, and false advertising and unfair competition laws.”
What does Bradley Sostak want?
The litigator has made claims that he has suffered a loss of $118,100 in his investments due to XRP’s attempts at manipulating the market using unfair means.
“For example, in 2014, Ripple publicly stated on its www.ripplelabs.com/xrp-distribution/ website that “we will engage in distribution strategies that we expect will result in a stable or strengthening XRP exchange rate against other currencies.” (Ripple has since deleted that web page, as if that somehow erases history.) Ripple greatly increased these efforts to push XRP on the general public in 2017 and 2018. The price of XRP has fallen dramatically since early 2018, leaving its investors, including Lead Plaintiff, with substantial financial losses.”
The lawsuit document added:
“Lead Plaintiff purchased 128,978.88 XRP between January 1, 2018 and January 16, 2018 for approximately $307,700 in Bitcoin and USDT (a cryptocurrency issued by Tether). Lead Plaintiff sold that XRP between January 9, 2018 and January 17, 2018 for approximately $189,600 in Bitcoin and USDT. Lead Plaintiff therefore sustained a loss of approximately $118,100 as a result of his XRP investments.”