Amended Lawsuit Against Ripple Now Offers Theory That XRP May Not Be a Security

An amended complaint against Ripple has been filed by XRP investors in a long-running lawsuit involving allegations of breaches to U.S. securities law.

The two-year class-action – which claims Ripple, a blockchain payments infrastructure firm, violated securities rules with its sales and marketing of the XRP cryptocurrency – has been refiled with additional claims to back up the case that Ripple and its CEO, Brad Garlinghouse, had undertaken unfair or fraudulent business practices.

The suit, with former XRP investor Bradley Sostack as lead plaintiff, was brought on behalf of all investors who purchased XRP tokens issued and sold by Ripple. It alleges a scheme to raise hundreds of millions of dollars through sales of an unregistered security, XRP, to retail investors.

According to a court document filed on March 25 (see below), a sixth claim for relief asserts false advertising in violation of California business law. Notably, this amendment appears to see the plaintiffs hedging their original case, stating this claim is made “under the alternative theory that XRP is not a security.”

An additional seventh claim further accuses the firm of unfair competition in violation of California law, also under the theory that XRP is not a security.

The amendments add no further detail to the existing claims and seems aimed to inject the “alternative theory” into the suit in case the judge rules that Ripple did not issue and sell an unregistered security.

Plaintiffs had the option to refile amended claims under California law within 28 days of the previous ruling. U.S. District Judge Phyllis Hamilton in the Northern District of California ordered in February that the suit could proceed to trial. The action could include claims filed under federal law but Judge Hamilton dismissed some claims filed under California state law, prompting the refiling.

The order followed a hearing held in mid-January between the plaintiff, Bradley Sostack and the defendant, Ripple, its XRP II subsidiary and CEO, Garlinghouse. 

Read the full filing: