The definition of a crypto security is quite simple. If a company is selling a cryptocurrency to investors who expect a profit, then that cryptocurrency is considered a security, according to Security and Exchange Commission (SEC) guidelines. Ripple (XRP) clearly meets this definition, and a class action lawsuit has been brought against Ripple Labs alleging that investors have lost vast sums of money due to Ripple Labs not following securities guidelines. Ripple Labs has tried hard to sidestep the securities debate in this court case, but it seems to be a high-stakes game of Russian roulette, and Ripple (XRP) doomsday may be approaching in 2020.
The reason this class action lawsuit is happening in the first place is that the Ripple (XRP) market is constantly dumped on by Ripple Labs, which has so far sold billions of dollars of Ripple (XRP) and still has 57 billion Ripple (XRP) that will be dumped long term. Further, the Ripple (XRP) market has had two catastrophic bubbles in the last three years. In May 2017, the Ripple (XRP) market cap soared to $15 billion, only to crash to $9 billion by December 2017. Then the Ripple (XRP) market cap soared to $147 billion in January 2018, before crashing to $11 billion by September 2018.
These bubbles led to devastation among Ripple (XRP) investors. The Plaintiffs in the lawsuit allege that not only did Ripple Labs dump tons of Ripple (XRP) which acted to severely deflate these bubbles, Ripple Labs also acted to inflate the price of Ripple (XRP) via a litany of false and misleading statements, which allegedly caused the bubbles in the first place. This violates false advertising and unfair competition laws.
An even bigger allegation is that since Ripple (XRP) is a security, Ripple Labs has failed to follow the Securities Act, which requires companies who sell securities “to provide
investors with full disclosure of material information concerning public offerings of securities in commerce, to protect investors against fraud and, through the imposition of specified civil liabilities, to promote ethical standards of honesty and fair dealing.”
Basically, this lawsuit alleges that Ripple Labs is getting all the benefits of selling a security en-masse, without providing investors with proper protection, which has led to vast investor losses.
Ripple Labs’ response to this lawsuit tried to sidestep the entire security debate, by saying that a lawsuit can only be brought against Ripple Labs within three years of the first securities offering, despite the fact that Ripple Labs continues to sell large chunks of Ripple (XRP) to investors. Ripple Labs asked for the case to be dismissed on these grounds.
The Plaintiffs shot down this dismissal motion with a gauntlet of past court cases, which reveal the precedent that a company can be sued within three years of the last securities offering. Since Ripple Labs constantly sells Ripple (XRP), this precedent establishes that they can be sued at anytime for securities violations.
Basically, Ripple Labs’ motion to dismiss is laughable, and it would truly be shocking if it succeeded.
Ultimately this case is quite simple. The Plaintiffs allege that Ripple Labs is selling securities, i.e. Ripple (XRP), without providing proper protections to investors that are mandated under law, and further that Ripple Labs is manipulating the market via hyping Ripple (XRP) and then dumping tons of coins. At this point,
Ripple Labs is using their vast sums of money to hire the best lawyers, who are trying their best to dismiss the case for reasons that have nothing to do with the actual problem at hand. Considering the laws in place, the Plaintiffs have a right for this case to go to trial, and that may bring about Ripple (XRP) doomsday sometime in 2020 if Ripple (XRP) is ultimately declared a security, which would effectively gut Ripple Labs.