Ripple Labs is back in court again for the third time. Another lawsuit by an investor has just hit the company behind XRP.
Just like the two lawsuits before it, this one also claims that XRP is unregistered security and it’s not at all a decentralized crypto in the same way as Ethereum and Bitcoin.
XRP has all of the “traditional hallmarks of a security, yet defendants failed to register them as such,” according to the lawsuit.
More than that, the lawsuit alleges that the purchasing of XRP “constitutes an investment contract, as
XRP purchasers, including plaintiff, provided [money]… In exchange for XRP”.
Reports say that the plaintiff of the suit and others who hold XRP are “reasonably expected to derive profits from their ownership of XRP, and the defendants themselves have frequently highlighted this profit motive,” via the lawsuit notes.
The connection between Ripple Labs and XRP
The relationship between XRP and the company behind it seems to be the most difficult thing to ascertain so far.
On the surface, XRP doesn’t seem to be a security regarding behavior. For instance, owning XRP dies not denote ownership in Ripple Labs and doesn’t entitle you to dividends or other payouts.
On the other side, Ripple Labs and the staff hold the vast majority of all XRP coins that will ever exist, and it only takes a bit to realize that anything that benefits the value of XRP benefits the senior staff at Ripple.
If XRP goes up, banks will take more interest in the company even if these two are not directly linked.
According to the lawsuits, XRP is a security and Ripple Labs should have been able to exert some degree of control over its price. If XRP is eventually classified by the SEC or a court to be a security, we’ll see what happens, but for the moment, Ripple Labs keeps denying that XRP is a security.