Tyler Toomey, a resident of Florida, has filed a class-action lawsuit against Ripple Labs and the company’s CEO Brad Garlinghouse over a $48.56 loss incurred investing in the XRP token.
The lawsuit was filed with the Middle District of Florida and alleges that the defendants sold “millions of dollars (or more) of the XRP token without registering with Federal or local authorities, and alleges the defendants stated numerous times XRP was not a security “when it fact it is,” while claiming they “actively concealed from investors the true nature of XRP.”
It further claims that Toomey, the plaintiff, owned 135 XRP tokens in November 2020, which were worth around $97.8 at the time, and that he sold it in two transactions in December 2020 for $49.24,” suffering a loss of about 50%.
He then launched the class action lawsuit, which is estimated to have cost eight times more in filing fees than the loss he claims to have incurred, as according to the Middle District of Florida website it costs $402 to do so.
The case has a few mysterious turns to it, as Toomey is demanding $5 billion, and the Magistrate presiding over the case shares his surname – Magistrate Judge Joel B. Toomey. It’s unclear whether both are related, but speculation is abounding on social media.
The class action lawsuit states that the plaintiff “seeks to represent a class defined as all persons or entities in the State of Florida who purchased XRP.” It’s possible that the motivation behind the lawsuit was to enable other investors to take action.
The plaintiff is also seeking “injunctive relief” over the amount of XRP held by the defendants, which is claimed they “can continue to monetize, while creating substantial risk to investors.” Ripple, it’s worth noting, is currently dealing with a lawsuit from the U.S. Securities and Exchange Commission (SEC).
The SEC’s lawsuit alleges Ripple, Garlinghouse and Chris Larsen “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” Michael Arrington, founder of TechCrunch and Arrington XRP Capital, has recently questioned the lawsuit.
While most cryptocurrency trading platforms delisted XRP after it was announced, some crypto exchanges have sided with Ripple on the lawsuit, arguing that the SEC’s move hurt XRP investors.
Crypto exchange Uphold pointed out that the SEC’s goal is to protect consumers, and believes it’s hard to see “how a judgment rendering XRP essentially worthless and inflicting billions of dollars of losses on retail investors” would square with that goal.
Ripple itself has argued the lawsuit “already affected countless innocent XRP retail holders with no connection to Ripple.” It added it “muddied the waters for exchanges, market makers, and traders.”
Featured image via Pixabay.