There is a class-action lawsuit that might change the way cryptocurrencies and initial cryptocurrency offerings (ICOs) are marketed. The suit threatens to change all altcoins’ legal status by seeking to redefine Ripple (XRP) as an “unregulated security” rather than currency.
That might create a level of regulation and legal oversight that would make cryptocurrencies unprofitable and perhaps unviable in the United States. It would certainly threaten all the financial services altcoins such as BAAB (BAX) and Bancor (BNT).
Lawsuit Seeks to Redefine ICOs
Coffey’s suit is potential dynamite because it is a class action litigation that was filed on behalf of all Ripple owners in the United States. The suit is the natural result of the questionable shenanigans that Ripple Labs and its shills in the mainstream media used to promote XRP.
“Defendants have since earned massive profits by quietly selling off this XRP to the general public, in what is essentially a never-ending initial coin offering (“ICO”),” the suit alleges.
One way Coffey v. Ripple Labs would change the cryptocurrency market is by proving that ICO and altcoin owners have many of the same rights as stockholders.
“Like the better known initial public offering (“IPO”), in an ICO, digital assets are sold to consumers in exchange for legal tender or cryptocurrencies (most often Bitcoin and Ethereum),” Coffey’s complaint claims. “These tokens generally give the purchaser various rights on the blockchain network and resemble the shares of a company sold to investors in an IPO. Unfortunately, these ICOs have become a magnet for unscrupulous practices and fraud.”
Carried to its logical conclusion that would mean cryptocurrency owners would have many of the same legal rights as stockholders including ownership, and voting rights in companies. That would make a lot of work for attorneys and drive most ICOs out of the United States.
Suit Alleges Ripple tried to Bribe Coinbase
“Defendants also reportedly offered to bribe popular U.S.-based cryptocurrency exchanges Coinbase, Inc. (“Coinbase”) and Gemini Trust Company, LLC (“Gemini”) to list XRP,” the Coffey complaint alleges. “In or about the fall of 2017, Ripple Labs is reported to have offered Coinbase more than $100 million worth of XRP to start letting users trade XRP.”
“A Ripple executive is also reported to have asked whether a $1 million cash payment could persuade Gemini to list XRP in the third quarter of 2017,” the suit claims. Gemini is the cryptocurrency investment company controlled by the Winklevoss Twins.
Neither Coinbase nor Gemini listed Ripple, but these allegations make Ripple Labs look really bad. Ripple Labs CEO Bradley Garlinghouse is listed as a defendant in the suit as is another entity called XRP II, LLC.
The full lawsuit is Ryan Coffey v. Ripple Labs, Inc. it was filed in Francisco County Superior Court on May 3, 2018. The Case Number is CGC-18-566271.
It looks as if Ripple is reaping the fruits of its sleazy publicity tactics. Hopefully, this suit will not be the end of the ICO boom in the United States.
Warren Buffett is not investing in Ripple
Claims that Warren Buffett and Berkshire Hathaway (NYSE: BRK.B) have invested in Ripple (XRP) are patently false.
A Global Coin Report story claims Uncle Warren is investing in Ripple because he is investing in some banks that are working with Ripple technology. That is true, but it does not mean Buffett owns Ripple or believes in the technology. He simply invests in a number of large banks that are experimenting with Ripple.
Smart investors should learn to do their own research and ignore the media hype. One has to wonder how long the hyping of Ripple can continue, and how bad it will make cryptocurrency look to the general public.
Ripple is not a Scam
The outrageous claims do not mean that Ripple is a scam. Despite the sleazy promotions; Ripple is a good piece of technology that a lot of big banks are adopting.
Investors need to look at the technology, not at the marketing efforts which are thoroughly corrupt.