Ripple Labs, which makes the XRP token, was sued by investor Tetragon Financial Group after the U.S. Securities and Exchange Commission (SEC) said virtual tokens were sold improperly, Bloomberg reported Tuesday (Jan. 5).
Tetragon, in filings that are public, said it wants to “enforce its contractual right to require Ripple to redeem” Series C preferred stock held by Tetragon and to block Ripple from using any cash or other liquid assets until the payment is made.
In addition, Tetragon wants to get a temporary restraining order, a preliminary injunction and an expedited trial.
Coinbase, which is the biggest cryptocurrency exchange in the U.S., quit selling XRP last week after the SEC sued Ripple, alleging Ripple misled investors by selling over $1 billion without registering with the agency, according to Bloomberg.
A proposed class-action lawsuit against Coinbase claims it owes commissions on XRP trades and has known the tokens qualify as securities, Bloomberg writes.
The lawsuit was filed in San Francisco just two weeks after Coinbase filed what could be the first crypto-related initial public offering (IPO) in the U.S., which could be a huge boost for the form gaining more mainstream recognition.
The lawsuit against Ripple will head for its first court date on Feb. 22, PYMNTS reported. It will be held in virtual court and legal counsel for those named, including Ripple Labs CEO Brad Garlinghouse and Executive Chairman and Co-Founder Christian Larsen, were called to appear in an online pretrial conference with Judge Analisa Torres.
In a statement, Ripple said the suit had already harmed “countless” XRP holders without any connection to the company as of late last year. The company said most of its customers aren’t in the U.S. and there were clear rules for using XRP in numerous other countries.
The suit is based on the divide in opinion on whether Ripple is a security or a currency, which would determine if it was regulated by the SEC. Ripple says XRP is a currency because it operates as a medium of exchange, unit of account and/or a store of value, PYMNTS writes.