The third biggest cryptocurrency by market capitalization, the Ripple (XRP), was impacted by a collective lawsuit filed on Thursday, May 3rd, in the United States. The value of the token collapsed this week, with a 24% downtrend on a seven-day basis and an 11.26% drop in the price of the token over the last 24 hours.
The complainant, Ryan Coffey, is demanding an undisclosed compensation and has declared that Ripple Labs is currently marketing unregistered securities. The report notes that the US Securities and Exchange Commission (SEC) has made it quite clear that digital tokens, such as XRP, frequently represent “securities and cannot be sold legally without being registered with the SEC or requesting an exemption from registration.”
Ripple (XRP) prices – XRP dropped hugely
At the moment of this article, XRP trades at $0.70, dropping by 11.26%, due to the negativity that surrounds it but also due to a massive cryptocurrencies market downtrend, recorded today.
Apparently, the crypto market dropped due to the massive selling of cryptocurrency holdings conducted by the majority of UpBit traders.
However, the analysts think this negative correction is only temporary as the traders will re-invest in the following days. Therefore, the Ripple (XRP), along with the other cryptos, will recover.
Ryan Coffey’s case states that XRP is owned by people related to the company and is released in a selective way to boost its value
Coffey’s litigation is addressed to both the company and its CEO Brad Garlinghouse and it is argued that, unlike being mined such as Bitcoin (BTC) or Ethereum (ETH), XRP tokens “are created from scratch” and are possessed by people related to Ripple (XRP) who issue the altcoin in a selective way, as in an unending ICO.
It is alleged, according to the legal action, that these people are quietly marketing Ripple to the masses in an endeavor to boost the demand for XRP and, consequently, the price of the cryptocurrency in an attempt to raise their profits.
Furthermore, a number of recent Bloomberg reports emphasize the circumstance that, as the XRP is still not well understood and clarified, it might indicate that the Ripple (XRP) falls under the SEC’s guidelines for securities.