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UnitedCorps Launches Suit Against BCH ABC Supporters. “Bitmain and Bitcoin.com Hijacked the Blockchain”

United American Corp. (UnitedCorp), a digital technologies company focused on developing products related to blockchain technologies, and cryptocurrency mining (among other practices) has decided to take legal action against the most critical players on the BCHABC camp of the infamous “BCH hash war“, accusing them of manipulating not only the market but also the core functioning of the entire blockchain.

The lawsuit was filed before the UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA and in the first place goes directly against Bitmain, Inc., Saint Bitts LLC d/b/a Bitcoin.com (“Bitcoin.com”), Roger Ver, Bitmain Technologies Ltd, Bitmain Technologies Holding Company (together with Bitmain, Inc. and Bitmain Technologies Ltd., “Bitmain”), Jihan Wu, Payward Ventures, Inc. d/b/a Kraken (“Kraken”), Jesse Powell, Amaury Sechet, Shammah Chancellor and Jason Cox.

BCH ABC: Were Developers Hijacking the Blockchain?

The essence of the lawsuit is that the defendants participated in a premeditated scheme in which, in a dishonest way and contrary to the interests of the users, they illegally exercised their power as administrators of various pools to illegally use hash power in an unnatural manner to ensure that they have the longest chain with the most significant proof of work. After consolidating this domination, they arbitrarily implemented a series of checkpoints to prevent a return to previous blocks.

“By essentially bringing in mercenaries from another network (the BTC network) to temporarily mine the Bitcoin Cash network during the software upgrade and then leave, Bitmain and Bitcoin.com effectively hijacked the blockchain. Their actions diluted the “vote” being exercised by the existing nodes during the upgrade, violated the ground rules of the network that other users had relied on and respected for years, and artificially pumped up the chain implementation with computer hashes to dominate the temporary software upgrade
But the scheme did not end there. The next day on November 16, 2018, BitcoinABC through defendants Amaury Sechet, Shammah Chancellor, and Jason Cox, implemented a “poison pill” in the chain referred to as a checkpoint.”.
The implemented checkpoint is problematic because it also “centralized” what should be a decentralized market due to the way the checkpoint was added and its location close to the tip of the blockchain
The decision by Bitcoin ABC to “lock down” the blockchain after an arbitrary number of blocks close to the tip of the blockchain – through a mechanism referred to as“checkpoints” and “Deep Reorg Prevention” – will allow anyone with 51% hashing power to quickly cement control of the blockchain ledger. They would also cement control over future changes to Bitcoin cash functionality as well as changes to the consensus rules. Combining this checkpoint power with the hashing power of Bitcoin ABC backers amounts to centralization. Anyone who combines hashing power and checkpoints in this fashion will be able to override any consensus reached by the rest of the network, forcing others to conform or create an unwanted hard fork.”

Not Just a “Developer Thing”

Similarly, UnitedCorp states that the rest of those involved were aware of the damage their actions could cause since the “conspiracy” had been planned for a long time. Not only did it involve people in the world of mining, but it also used programmers, communicators and even exchanges like Kraken which already manifested its pro-BCHABC stance before there was any result:

Indeed, as early as the next day after the update, individuals in the cryptocurrency industry such as Andreas Brekken (self-proclaimed “advisor to some of the most successful blockchain projects in the world” and software engineer at Kraken), held online forums acknowledging that Bitcoin ABC developers and crypto exchanges such as Kraken agreed to implement centralized checkpoints.
See https://www.youtube.com/watch?v=UjAHJY0QZhs; see also
https://brekken.com/about. Brekken goes on to admit in the video “this has been planned for a long time” and “we knew within 30 minutes we had it.” “

BCH Hash War: A Lose-Lose Situation

The results of the BCH War were catastrophic, as recognized by virtually the entire community of crypto users. The market crash affected the normal functioning of UnitedCorp’s economic activities, for which they hope to obtain compensation if the Court determines that these losses occurred as a result of the dishonest actions taken by the defendants:

“As a result of the aforementioned market manipulation, the value of the cryptocurrency that Plaintiff mines in its BlockchainDomes has fallen significantly. The combined value of the forked currency is lower than the pre-fork currency, and the resulting confusion has been severely detrimental to the market overall. Some trading platforms have chosen to list only one of the two resulting currencies, thus reducing liquidity and the value of the currencies.”

UnitedCorp bases its claim on the fact that the aforementioned individuals came together to plan and execute actions that resulted in a violation of Section 1 of the Sherman Act and section 4 of the Clayton Act. For this reason, it expects not only that the implementation of checkpoints and similar changes will be prohibited, but also that the blockchain will be restored to “its previously decentralized form with the previous consensus rule.”

BCH ABC vs BCH SV comparison.<br /> Graphs: Coinlib

So far, there has been no pronouncement by those accused. The full text of the lawsuit is available here

The post UnitedCorps Launches Suit Against BCH ABC Supporters. “Bitmain and Bitcoin.com Hijacked the Blockchain” appeared first on Ethereum World News.

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United American Corp. (UnitedCorp), a digital technologies company focused on developing products related to blockchain technologies, and cryptocurrency mining (among other practices) has decided to take legal action against the most critical players on the BCHABC camp of the infamous “BCH hash war“, accusing them of manipulating not only the market but also the core functioning of the entire blockchain.

The lawsuit was filed before the UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA and in the first place goes directly against Bitmain, Inc., Saint Bitts LLC d/b/a Bitcoin.com (“Bitcoin.com”), Roger Ver, Bitmain Technologies Ltd, Bitmain Technologies Holding Company (together with Bitmain, Inc. and Bitmain Technologies Ltd., “Bitmain”), Jihan Wu, Payward Ventures, Inc. d/b/a Kraken (“Kraken”), Jesse Powell, Amaury Sechet, Shammah Chancellor and Jason Cox.

BCH ABC: Were Developers Hijacking the Blockchain?

The essence of the lawsuit is that the defendants participated in a premeditated scheme in which, in a dishonest way and contrary to the interests of the users, they illegally exercised their power as administrators of various pools to illegally use hash power in an unnatural manner to ensure that they have the longest chain with the most significant proof of work. After consolidating this domination, they arbitrarily implemented a series of checkpoints to prevent a return to previous blocks.

“By essentially bringing in mercenaries from another network (the BTC network) to temporarily mine the Bitcoin Cash network during the software upgrade and then leave, Bitmain and Bitcoin.com effectively hijacked the blockchain. Their actions diluted the “vote” being exercised by the existing nodes during the upgrade, violated the ground rules of the network that other users had relied on and respected for years, and artificially pumped up the chain implementation with computer hashes to dominate the temporary software upgrade
But the scheme did not end there. The next day on November 16, 2018, BitcoinABC through defendants Amaury Sechet, Shammah Chancellor, and Jason Cox, implemented a “poison pill” in the chain referred to as a checkpoint.”.
The implemented checkpoint is problematic because it also “centralized” what should be a decentralized market due to the way the checkpoint was added and its location close to the tip of the blockchain
The decision by Bitcoin ABC to “lock down” the blockchain after an arbitrary number of blocks close to the tip of the blockchain – through a mechanism referred to as“checkpoints” and “Deep Reorg Prevention” – will allow anyone with 51% hashing power to quickly cement control of the blockchain ledger. They would also cement control over future changes to Bitcoin cash functionality as well as changes to the consensus rules. Combining this checkpoint power with the hashing power of Bitcoin ABC backers amounts to centralization. Anyone who combines hashing power and checkpoints in this fashion will be able to override any consensus reached by the rest of the network, forcing others to conform or create an unwanted hard fork.”

Not Just a “Developer Thing”

Similarly, UnitedCorp states that the rest of those involved were aware of the damage their actions could cause since the “conspiracy” had been planned for a long time. Not only did it involve people in the world of mining, but it also used programmers, communicators and even exchanges like Kraken which already manifested its pro-BCHABC stance before there was any result:

Indeed, as early as the next day after the update, individuals in the cryptocurrency industry such as Andreas Brekken (self-proclaimed “advisor to some of the most successful blockchain projects in the world” and software engineer at Kraken), held online forums acknowledging that Bitcoin ABC developers and crypto exchanges such as Kraken agreed to implement centralized checkpoints.
See https://www.youtube.com/watch?v=UjAHJY0QZhs; see also
https://brekken.com/about. Brekken goes on to admit in the video “this has been planned for a long time” and “we knew within 30 minutes we had it.” “

BCH Hash War: A Lose-Lose Situation

The results of the BCH War were catastrophic, as recognized by virtually the entire community of crypto users. The market crash affected the normal functioning of UnitedCorp’s economic activities, for which they hope to obtain compensation if the Court determines that these losses occurred as a result of the dishonest actions taken by the defendants:

“As a result of the aforementioned market manipulation, the value of the cryptocurrency that Plaintiff mines in its BlockchainDomes has fallen significantly. The combined value of the forked currency is lower than the pre-fork currency, and the resulting confusion has been severely detrimental to the market overall. Some trading platforms have chosen to list only one of the two resulting currencies, thus reducing liquidity and the value of the currencies.”

UnitedCorp bases its claim on the fact that the aforementioned individuals came together to plan and execute actions that resulted in a violation of Section 1 of the Sherman Act and section 4 of the Clayton Act. For this reason, it expects not only that the implementation of checkpoints and similar changes will be prohibited, but also that the blockchain will be restored to “its previously decentralized form with the previous consensus rule.”

BCH ABC vs BCH SV comparison.<br /> Graphs: Coinlib

So far, there has been no pronouncement by those accused. The full text of the lawsuit is available here

The post appeared first on Ethereum World News.

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Chinese Trader Sues OkCoin After Bitcoin Cash (BCH) Fork Dispute

According to a recent report from LegalWeekly, a Chinese cryptocurrency trader has served China-based OkCoin with a lawsuit regarding a Bitcoin Cash (BCH) related dispute.

In accordance with the Chinese news outlet’s article, a trader known only by the pseudonym Feng Bin sued OkCoin on the grounds of the exchange denying his requests to obtain 38.748 Bitcoin Cash from August’s hard fork of the original Bitcoin chain.

LegalWeekly claims that this issue arose at the start of December 2017, when Feng Bin attempted to withdraw the Bitcoin Cash he was entitled to, as a result of his Bitcoin holdings at the time of the heavily-contested fork. While attempting to withdraw from OKCoin, the user reportedly “found that there was no ‘button’ to extract the [BCH] that the platform promised.”

As one does, the trader immediately took up this issue with the exchange’s support team, who told him that the BCH claim time had expired prior to his request for withdrawal, essentially leaving Feng ‘high and dry’. However, the trader pointed out that there was no explicit announcement regarding the expiry of the forked coins, hence the initiation of this legal process. Seeming rightfully outraged, Feng told reporters the following:

“I have been paying attention to the announcement of the OKcoin currency release. In all the announcements, there is no declaration of the deadline for receipt and the removal of the program.”

As it stands, the Chinese investor is currently seeking financial compensation for 38.7 Bitcoin Cash, along with the profits lost as a result of Feng’s lost opportunity to sell Bitcoin Cash at all-time highs. More specifically, the plaintiff is looking for the compensation of approximately 170,000 Yuan, or $24,800 U.S. dollars.

LegalWeekly went on to add that OKCoin has since contested the lawsuit, noting that the plaintiff’s claims were questionable. The exchange points out that the trades conducted by Feng seemed abnormal in 2017’s frothy market conditions, potentially indicating that this was all part of a malicious scheme. The local news source did not indicate the current status of the case, but for now, it still seems to be up in the air.

Coinbase Still Faces BCH-Related Lawsuit 

While OKCoin may be in the clear for now, Coinbase may still be subject to legal issues regarding the Bitcoin Cash fork, as reported by Ethereum World News.

As Coinbase confidentially prepared to launch Bitcoin Cash, the price of the asset saw an abnormal trend upwards, quickly seeing an influx in buying pressure. Upon the official release of BCH support, users began to realize that something shady could be afoot, speculating that Coinbase insiders bought large amounts of Bitcoin Cash prior to the listing.

This theory quickly gained traction throughout the cryptocurrency community, with Brian Armstrong, Coinbase’s CEO, initiating an internal investigation, alongside two established law firms based in the U.S. After a months-long investigation, it was revealed that Coinbase employees were not responsible for the apparent bout of questionable price action.

While the internal investigation was met with no legal backlash, there is still a pending class-action lawsuit against the well-known cryptocurrency platform. Lynda Grant, the lawyer at the head of this case, noted that the lawsuit is still in a procedural phase, with the Coinbase investigation results seemingly having no visible effect on the class at large.

Title Image Courtesy of Marco Verch/Flickr

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YouTube Accused of Negligence in BitConnect Fraud Lawsuit

Digital media giant YouTube has been named in class action lawsuit tied to the collapse of BitConnect, the cryptocurrency lending platform widely accused of fraud.

BitConnect’s shutdown in January – which followed a series of warnings from U.S. investors – triggered a number of investor lawsuits, including one filed in late January in Florida. BitConnect’s platform was tied to a token and in-house crypto exchange, both of which have gone defunct in the months since (once valued above $400, the token is now worth less than $0.50 apiece according to CoinMarketCap).

That lawsuit later became a consolidated class-action following a court ruling in June, coming in the wake of claims of an ongoing inquiry by the Federal Bureau of Investigation.

The lawsuit faults YouTube for negligence in not policing the content on its site – particularly promotional videos by BitConnect boosters and affiliates – more tightly. The plaintiffs wrote that, all told, the top 10 most popular BitConnect affiliates “published over 70,000 hours of unedited content, generating 58,000,000 views and luring hundreds if not hundreds of thousands of victims.”

They went on to state:

“By enacting policies designed to prevent bad actors (such as those soliciting investments in fraudulent Ponzi schemes) from disseminating harmful, offensive or inappropriate content through its platform, YOUTUBE owed, by its own assumption, Plaintiffs and the Class a duty to reasonable care to prevent such content from harming its users.”

YouTube, according to the lawsuit, “failed as a gatekeeper to protect its users.”

Google – YouTube’s parent company – notably moved in March to ban cryptocurrency ads, including those tied to initial coin offerings (ICOs). That policy went into effect last month.

In an email to CoinDesk, David Silver, founder of the Silver Miller law firm that filed the class-action suit, urged the company to “take responsibility” for its alleged role.

“The platform allowed BitConnect to reach hundreds of thousands of potential investors, all while YouTube was aware that BitConnect was a scam. As the old saying goes: Sometimes when you lie down with dogs, you get fleas,” he wrote.

Google did not immediately respond to a request for comment.

Image Credit: BigTunaOnline / Shutterstock.com

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Another Ripple Lawsuit Claims XRP Is A Security

Distributed ledger startup Ripple is facing another class-action lawsuit tied to the legal classification of the XRP cryptocurrency.

A lawsuit filed in the Superior Court of California (San Mateo County) claims that Ripple “created the XRP token and then used sales of the tokens in order to fund its operations and the development of the XRP ecosystem.”

Filed by California resident David Oconer, the complaint names Ripple Labs, XRP II (Ripple’s licensed money services business), Ripple CEO Brad Garlinghouse and 25 unnamed persons affiliated with the firms as defendants.

The suit claims:

“Here, the XRP offered and sold by the defendants had all the traditional hallmarks of a security, yet defendants failed to register them as such. The purchase of XRP constitutes an investment contract, as XRP purchasers, including plaintiff, provided consideration (in the form of fiat, such as U.S. dollars, or other cryptocurrencies) in exchange for XRP. XRP purchasers reasonably expected to derive profits from their ownership of XRP, and defendants themselves have frequently highlighted this profit motive.”

Like previous lawsuits, Oconer’s filing seeks damages for the price drop from earlier this year, noting that while traditional securities would afford owners some measure of control over the firm, XRP does not. Oconer goes a step further, claiming that Ripple has complete control over the XRP ledger and that the network is not decentralized like bitcoin or ethereum.

The suit comes on the heels of two others with similar claims, as previously reported by CoinDesk. Former Securities and Exchange Commission (SEC) chair Mary Jo White and former SEC official Andrew Ceresney are representing the company in the first suit, though it is unclear whether they will do so for the second and third ones.

Previously, Garlinghouse has publicly stated that “XRP is not a security,” claiming that the XRP ledger is decentralized, independent of Ripple Labs and that purchasing XRP tokens does not give investors ownership of Ripple.

A spokesperson for Ripple did not immediately respond to a request for comment.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ripple (XRP) Facing New Allegations for Price Manipulation

One of the latest events related to Ripple Labs has nothing positive in it. Private XRP crypto-investor alleges in the last security fraud lawsuit that Bradley Garlinghouse – the CEO of Ripple and Ripple Labs Inc. have mixed their proprietary Ripple tech and also price manipulated for their profit.

Ripple XRP

All three lawsuits allege that keeping in mind the centralized status of XRP and the mining-less supply model gave the opportunity to Ripple Labs Inc to have a not-stopping Initial coin Offering period. This lead to raising near $100 mil worth of their token. This is equal only for the FourthQ in 2017.

Even that there is a long-running debate going on if XRP is a security or not it has still to be clarified. Kyle Samani, Multicoin co-founder added that traders should stay away from Ripple, as he said it is for sure a security. But, Brad Garlinghouse – Ripple’s founder, strongly denies any claim that the token XRP is a security of any sort.

“It’s quite clear to us that Ripple is a security. We don’t know when that news is going to drop, but the catalysts seem to have kind of gone away from Ripple […] My point is, if Ripple is labeled a security formally by the SEC, all of the crypto exchanges are going to stop trading Ripple. So if that happens, liquidity is going to dry up on XRP and the price will plummet.”

But, keeping in mind that it is still not classified as a security, all three hits against Ripple Labs could be connected and blowing away the blurry vision. The Recorder reports that the sale of XRP “dwarfed any other source of revenue at Ripple”.

If the famous Howey test [test created by the U.S. Supreme Court in 1946] finds out as to whether the asset is a security or not much will be discovered. Accordingly, it could be proven if XRP’s story is one very long illegal ICO that would be followed up with the lawsuits turning successful giving a massive critical hit against the crypto-verse in a global range.

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Ripple Labs (XRP) Hired Former SEC Chair for the Alleged Sale Lawsuit Case

Devevoise and Plimpton’s Mary Jo White and Andrew Ceresney are chosen to represent Ripple Labs in the lawsuit for alleged sale of unregistered securities – according to Law.com on June 4. Very interesting is the fact that Mary Jo White is a former US SEC [Securities and Exchange Commission] chair.

The Ripple Lawsuit

Ryan Coffey – investor, filed the lawsuit as he believes that his $551.89 in XRP were lost due to the digital coin not being registered as security with the SEC. He alleges that Ripple profited from increases in the cryptocurrency’s price at the expense of investors as Ripple maintains a “centralized XRP” ledger.

According to the report, the case has been transferred to the US District Court for the Northern District of California from the San Francisco County Superior Court.

The proposed class-action lawsuit alleges that Ripple violated state and federal securities laws. It rotates around the debate of whether XRP is a security, given its relationship with Ripple, as the firm highlights that the token is well defined.

The lawsuit names XRP II, Ripple’s registered and licensed MSB, and Brad Garlinghouse the CEO under the defendants status.

“Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security,” – Ripple’s Head of corporate communications – Tom Channick.

With that believe, Ripple wants to shake the base of the lawsuit as it continues to support the idea that XRP is not a security.

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No Disney, No PayPal? SEC Charges ICO Founder Over False Statements

The U.S. Securities and Exchange Commission has charged the company behind an initial coin offering (ICO) and its president with securities fraud.

Michael Stollery, also known as Michael Stollaire, has been accused along with Titanium Blockchain Infrastructure Services of violating the SEC’s antifraud and registration provisions in connection with a multi-million dollar token sale. The agency accused Stollaire of fabricating information for would-be investors and allegedly claiming that Titanium had relationships with companies like Paypal and Disney.

Officials with the U.S. securities regulator obtained an emergency asset freeze and the appointment of a receiver in relation to the token sale, which raised as much as $21 million, according to the SEC.

The focus on alleged misrepresentation echoes similar actions on the ICO front, given that the SEC has accused Centra and its three co-founders of lying about their relationship with card network operators Visa and Mastercard.

Robert Cohen, the head of the SEC Enforcement Division’s Cyber Unit, said in a statement:

“This ICO was based on a social media marketing blitz that allegedly deceived investors with purely fictional claims of business prospects. Having filed multiple cases involving allegedly fraudulent ICOs, we again encourage investors to be especially cautious when considering these as investments.”

According to statements, the complaint against Stollaire and Titanium was initially filed on May 22. Another company tied to Stollaire, EHI Internetwork and Systems Management Inc., was also named in the complaint.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ripple Labs Sued for Alleged Securities Act Violations

To say that trading cryptocurrencies is a volatile ride would be an understatement, good gains can be made but on the flip side you can also lose your shirt. A jilted investor has taken up the fight against the world’s third largest cryptocurrency alleging that the company has violated the Federal Securities Act.

San Diego attorney James Taylor-Copeland filed the suit on Thursday on behalf of Ryan Coffey who is seeking damages “on behalf of all investors who purchased Ripple tokens (“XRP”) issued and sold by Defendants,”. In addition to Delaware Corporation Ripple Labs Inc, XRP II limited liability company, CEO Brad Garlinghouse, and 10 unnamed parties were also included in the suit which is currently doing the rounds on Reddit.

The class action claims that Ripple created billions of coins “out of thin air” and profited immensely by selling them to the public in what it terms as a “never ending initial coin offering”. According to the summary of action;

“It arises out of a scheme by Defendants to raise hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws … Unlike cryptocurrencies such as Bitcoin and Ethereum, which are mined by those validating transactions on their networks, all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013.”

Specifically, it claims that the Securities Act has been violated as federal law requires any security that is offered or sold to the public be registered with the Securities and Exchange Commission (SEC). Whether a financial instrument qualifies as a security depends on something called the Howey test, a standard derived from a 1946 Supreme Court case. It is still being debated whether digital tokens such as XRP are considered as securities. Ripple’s head of corporate communications, Tom Channick, told Coindesk;

“We’ve seen the lawyer’s tweet about a recently filed lawsuit but have not been served. Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security.”

The suit also alleges that Ripple reportedly offered to bribe Coinbase in order to get XRP listed in late 2017;

“Ripple Labs is reported to have offered Coinbase more than $100 million worth of XRP to start letting users trade XRP. A Ripple executive is also reported to have asked whether a $1 million cash payment could persuade Gemini to list XRP in the third quarter of 2017.”

This will be one to watch as no official decision has been made yet by the SEC as to the status of cryptocurrencies as securities.

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Investor Sues Ripple Alleging 'XRP Is A Security'

An investor who claims they lost money buying and selling the cryptocurrency XRP has filed a class action lawsuit against distributed ledger startup Ripple, alleging that the company violated state and federal securities laws.

Ryan Coffey, represented by San Diego attorney James Taylor-Copeland, filed the suit in the San Francisco County Superior Court on Thursday. Coffey is seeking damages “on behalf of all investors who purchased Ripple tokens (“XRP”) issued and sold by Defendants,” naming Ripple, XRP II (the company’s registered and licensed MSB), CEO Brad Garlinghouse, and 10 unnamed parties.

Ripple Labs and Garlinghouse have come under increased scrutiny in recent weeks over the degree of association they have with XRP, a cryptocurrency that surged to a market capitalization of over $140 billion in January, but has since fallen below $35 billion. Ryan Zagone, Ripple’s director of regulatory relations, told a UK parliamentary committee Tuesday that “there’s not a direct connection between Ripple the company and XRP.”

For some observers, though, the relationship between the company and the cryptocurrency is clear. Thursday’s complaint argues:

“The development of the XRP Ledger, and the profits that investors expected to derive therefrom, were, and are, based entirely on the technical, managerial, and entrepreneurial efforts of Defendants and other third parties employed by Defendants.”

U.S. federal law requires companies selling securities to register with the Securities and Exchange Commission (SEC). Whether a financial instrument qualifies as a security depends on the Howey test, a standard derived from a 1946 Supreme Court case.

If an instrument involves an investment of money and carries a reasonable expectation of profits – an expectation that depends on the actions of a specifically identifiable group of people – then it is a security. Coffey’s complaint argues that XRP checks off all of those boxes.

When reached for comment, Tom Channick, Ripple’s head of corporate communications, told CoinDesk via email:

“We’ve seen the lawyer’s tweet about a recently filed lawsuit but have not been served. Like any civil proceeding, we’ll assess the merit or lack of merit to the allegations at the appropriate time. Whether or not XRP is a security is for the SEC to decide. We continue to believe XRP should not be classified as a security.”

Taylor-Copeland was not available to comment on the complaint before press time, but he wrote on his firm’s site: “Defendants have earned massive profits in violation of state and federal securities laws by selling XRP to the general public, in what is essentially a never-ending initial coin offering.”

Read the full complaint below:

Coffey v. Ripple Labs Complaint by CoinDesk on Scribd

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.