Ryan Coffey, an XRP (“Ripple”) investor, has filed a class action lawsuit in San Francisco County
The class action he has filed seeks damages on behalf of all investors who purchased XRP
tokens alleging that Ripple, the company behind the XRP token, has violated Federal and State securities
laws. The XRP token has seen monumental movement over the last 6 plus months from market cap
highs of $140 Billion dollars to recent market capitalizations around $35 Billion.
For some, the allegations in the class action suit look nothing more than sour grapes from a
buyer who bought the top of the market highs and is now down. Others may look at this suit as a signal
to the market that it’s time to take the next step in the maturation process, engaging the regulators.
Cryptocurrencies were borne out of an “anarchist” ethic which at its core despises law and regulation at
any level. The most ardent advocates of this ethic would never engage the regulators in their locales to
get “permission” to raise capital using the technology we now have the opportunity to use. While Ripple
is generally seen by the crypto community as “Central Bank Coin,” if this token is deemed a security it
would send reverberations through the space. The only survivors of that ruling would be the tokens who
took the initiative to engage the regulators early on and filed their offering as a security with the SEC.
While we will leave the security question to the regulators and the courts, we do believe that
the class action is actually a net positive for the crypto space. One of two things will occur:
1. The court will deem XRP a security and will force ICOs to file as securities with the appropriate
2. The court will deem XRP not a security and we will begin to get some real concrete guidance
around how to look at crypto from a legal perspective.
A ruling in this case will not give us a definitive way to look at ICO tokens or crypto generally but, any
move in the right direction is a huge help to companies looking to raise capital with a cryptocurrency.
We continue to believe that as the space matures, more cases like this will pop up and more clarity will
come to fore from the regulators and the courts. Clarity equals maturity and legitimacy. We are moving
in the right direction.
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