However, the case was brought on behalf of all XRP investors who purchased tokens after January 1, 2013.
SEC, in dozens of subpoenas to companies dealing in cryptocurrencies, indicated that digital assets like coins and tokens sold to investors should be recognized as "security", maintaining that this is in line with U.S. security regulations.
The lawsuit filed by an investor named Ryan Coffey in the San Francisco County Superior Court this Thursday seeks class-action status.
The lawsuit, which also names as a defendant Ripple CEO Brad Garlinghouse, argues that Ripple has essentially conducted a "never-ending ICO" that should be classified as an unregistered securities offering according to definitions used both by the US Securities Act and the California Corporations Code.
The plaintiff claims he did not expect to lose money on his investment given the promotional practices of Ripple Labs. "Given its reliance on sales of XRP, it is unsurprising that Ripple Labs aggressively markets XRP to drive demand, increase XRP's price, and thus its own profits". He added that ethereum's ether and Ripple's XRP could probably be classified as securities. However, according to reports a former top regulator thinks two of the most popular cryptocurrencies, Ethereum and XRP, are "noncompliant securities" operating outside US laws. Investors can then use their newly-acquired Ethereum or Bitcoin to purchase Ripple using one of the aforementioned exchanges. "Like any civil proceeding, we'll assess the merit or lack of merit to the allegations at the appropriate time", Tom Channick, Ripple's Head of Communications, told CCN in a statement.
Coffey argues that "XRP is a security" and that the defendants "themselves have recognized that XRP investors have a reasonable expectation of profit, and publicly touted XRP's price performance on numerous occasions".
[The lawsuit] arises out of a scheme by defendants to raise hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws.
Ryan Coffey, the lead plaintiff in the case, claims that he purchased 650 XRP on January 6, 2018, when the token was trading at $2.60.
Ripple (XRP), one of the top 5 digital currencies by market cap and widely hailed as a revolutionary bridge between the cryptocurrency space and the traditional banking world, has come under fire by a disgruntled investor.
Meanwhile, alleging that Ripple is engaging in unending ICO may be an allegation that may not be substantiated except with the final word of SEC.it is up to regulator to do the classification without excluding those involved.