Ripple Faces Third Securities Fraud Lawsuit

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Ripple is now facing its third class-action lawsuit for securities fraud.

On June 27, Ripple Labs Inc. and CEO Brad Garlinghouse received signed court documents by the California Superior Court on allegations of illegally profiting from price increases catalyzed by Ripple promotions.

As a centralized blockchain model, Ripple retains all of its XRP tokens and facilitates its gradual supply to fund the development of its proprietary payment and exchange network.

Still not technically classified a security, Ripple has now faced three lawsuits regarding securities law violations by private investors.

The December escrow announcement was meant to ensure Ripple investors that its central control over the token supply would not be abused for price manipulation purposes.

"By securing the lion's share of XRP in escrow, people can now mathematically verify the maximum supply that can enter the market this lockup eliminates any concern that Ripple could flood the market, which we've pointed out before is a scenario that would be bad for Ripple!".

The suit issued against Ripple alleges that gradual sell-offs to larger investors from the Ripple escrow account were conducted throughout the second quarter of 2018.

In conjunction with publicized promotions of new exchange listings, Ripple is alleged to have deliberately used its control over the XRP supply to strategically drive prices higher.

"While publicly touting its xCurrent, xRapid and xVia enterprise solutions, Ripple's primary source of income is, and has been, the sale of XRP. Ripple generated over $180 million in gross process through XRP sales in 2017 alone."

In response, Ripple has employed former SEC chair and Andrew Ceresney to lead its legal defense.

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