Ripple has once again been accused of violating security laws while selling and marketing its XRP cryptocurrency, this time by a little known Puerto Rico-based firm.
According to court documents filed on 1 May, a company called Bitcoin Manipulation Abatement (BMA) has alleged that both Ripple and its CEO, Brad Garlinghouse, had misled investors and sold XRP as an unregistered security when hosting its $1.1 billion sale. The company is looking to “recover damages” and obtain “compensatory damages” in regards to the alleged violations.
Ripple has been accused of misleading its investors with false announcements, in order to “artificially inflate the price at which they can sell XRP”, and of publicly promoting the sale without it being registered with the relevant regulators. BMA further claimed that the cryptocurrency had no utility at the time of its first sale, and that its value was coming from being a speculative investment.
The firm, which has only one director, Pavel Pogodin, made headlines for the first time in November 2019, when it filed a $150 million lawsuit against crypto derivatives exchange FTX. At the time, BMA accused the exchange of Bitcoin market manipulation and selling unlicensed securities in the United States. The case was thrown out of court a month later.
This is not the first time Ripple has been hit by a lawsuit alleging the firm sold XRP tokens as unregistered securities. The San Francisco-based company was hit by a class-action lawsuit in May 2018, which also accused the firm of deceiving investors and violating securities laws. Ripple tried to dismiss the case last December, but was unsuccessful, and the lawsuit is currently moving forward.