The complaint claims that Ripple knew that its digital coin could be a security offering after receiving legal advice “as early as 2012” but disregarded it.
Ripple suppressed and manipulated XRP price, created an information vacuum and deceived XRP investors for years, the SEC has alleged. The first fight in the SEC-Ripple legal battle got off with a hard punch as the United States Securities and Exchange Commission has alleged that executives of the parent company of XRP, Ripple Labs Bradley Garlinghouse and Christian Larsen manipulated XRP price by bolstering up or slowing down their coin sales based of the current market conditions, in an amended complaint.
The United States Securities and Exchange Commission in the amended complaint filed on February 18, further affirmed their accusations that the Chief Executive Officer, Brad Garlinghouse and Co-founder of Ripple Labs, Christian Larsen violated securities laws with the sale of XRP coins dated in 2013.
The complaint claims that Ripple knew that its digital coin could be a security offering after receiving legal advice “as early as 2012” but disregarded it. The company’s decision led to a $1.38 billion profit in the following years.
“From at least 2013 through the present, Defendants sold over 14.6 billion units of a digital asset security called ‘XRP,’ in return for cash or other consideration worth over $1.38 billion U.S. Dollars (‘USD’), to fund Ripple’s operations and enrich Larsen and Garlinghouse,” the complaint read.
Larsen and his fellow Ripple compatriot Garlinghouse were alleged to have gained $600 million from their unregistered sales of XRP. The filing also revealed that the SEC confirmed that these XRP sales happened while Garlinghouse acknowledged more than once that he was “very long” on XRP, alluding that they made money off misleading their investors.
“Ripple created an information vacuum such that Ripple and the two insiders with the most control over it Larsen and Garlinghouse could sell XRP into a market that possessed only the information Defendants chose to share about Ripple and XRP,” the complaint read.
Larsen was alleged to have instructed one of Ripple’s market makers back in 2015, to pause the sales of XRP as he believed that the market maker had made a mistake after it temporarily halted the sale of his and Garlinghouse’s XRP holdings because the price of the coin was already falling.
Larsen was alleged to have said, quote on quote; “keep sales paused for now ” and “wait until the market had recovered from this mistake.”
Stuart Alderoty, General counsel for the defendant expressed his displeasure about the latest development stating that this is nothing but a deliberate late attempt by the SEC to victimize Ripple Labs after years of inertia. Alderoty said on February 18 that, only one legal question remains to be settled claiming the latest amended complaint “raised nothing new.”
Alderoty later took to Twitter to further express his disapproval of the latest amendment. A tweet from him read “As many of you have seen, the SEC filed an amended complaint today. The only legal claim remains: did certain distributions of XRP constitute an investment contract? Disappointing the SEC needed to try to ‘fix‘ their complaint after waiting years to bring it in the first place.”
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