The class action lawsuit against Ripple was complemented by new investor statements. They backed up the accusation of violating securities laws with claims against the company’s CEO Brad Garlinghouse. According to them, he promoted the cryptocurrency among potential investors and at the same time sold it himself..
According to the updated lawsuit, in 2017 Garlinghouse described his position as “very, very, very long” and himself as “representing the HODL side.” From this, investors concluded that the CEO of Ripple intends to hold assets in XRP for a long time. In fact, they found out, Garlinghouse sold 67 million XRP for the entire 2017, and he did it within a few days after receiving them from Ripple..
“All 100 billion XRP was created out of thin air by Ripple at the time of release in 2013 before distribution and without any functionality beyond speculative investment,” the plaintiffs write. – The value of XRP in the possession of the defendants substantially exceeds the profits or cash flows from all other Ripple sources. Ripple’s main value proposition is XRP tokens, which she holds and sells. Ripple’s value proposition as a company depends on the promotion of XRP, and XRP is bought by investors in anticipation of profits from Ripple’s actions. “.
According to the plaintiffs, Ripple and Garlinghouse are promoting XRP as an “intermediate currency” under false pretenses in order to avoid classification as securities. “These statements contain distorted information and do not contain material facts, since the practical value of XRP (or lack thereof) directly depends on its value. Simply put, these false claims about the practical value of XRP are nothing more than an attempt to evade the enforcement of securities laws and increase demand for XRP. “.
In February, a judge dismissed Ripple’s motion to drop the claim, while also asking plaintiffs to provide more substantive evidence of the company’s misrepresentation of facts..