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A class-action lawsuit is accusing Ripple CEO Brad Garlinghouse of touting XRP to prospective investors while quietly liquidating his own holdings. The suit was originally filed in May 2018, alleging that Ripple had violated the US Securities Act through a 2013 initial coin offering (ICO) of XRP.
According to court documents uploaded by CoinTelegraph, an update to the lawsuit on Wednesday included an amended complaint accusing Garlinghosue of misleading investors amidst his own sale of XRP.
The complaint says Garlinghouse presented himself as “very, very, very long” and “on the HODL side” of XRP during 2017, despite allegedly selling 67 million of the tokens and liquidating all of his XRP from Ripple within days of receipt.
The suit also finds fault with XRP’s creation and the 100 billion token supply.
The complaint reads, “The value of XRP owned by Defendants substantially exceeds the value of Ripple’s revenue or cashflow from all other sources. Ripple’s dominant value proposition are the XRP tokens it owns and sells. Ripple’s value proposition as a company depends upon the promotion of XRP, yet XRP is entirely or essentially pre-functional and purchased by investors in anticipation of profit based on the efforts of Ripple.”
The plaintiffs accused Ripple and Brad Garlinghouse of misrepresenting XRP as a “bridge currency” in order to avoid being classified as a security.
The complaint continues, “These claims are misrepresentations and omissions of material facts to investors because the utility of XRP (or lack thereof) is pertinent to the value of XRP. Simply stated, these false claims about XRP’s utility are nothing but an attempt to avoid the application of securities laws and drive demand for XRP.