Tetragon requested the freezing of Ripple’s liquid assets. The plaintiff company led Ripple’s funding round in 2019.
Ripple Labs, Inc. and its co-founders Christian Larsen and Bradley Garlinghouse are now facing a lawsuit coming from one of their investors. This occurs after legal actions by the US Securities and Exchange Commission (SEC) that qualify XRP as a security.
In recent days, investment firm Tetragon Financial Group filed the lawsuit with a court in Delaware, USA. They are requesting reimbursement for the Series C shares that they obtained during a Ripple funding round at the end of 2019, which reached USD 200 million.
Similarly, Tetragon asked the US courts to freeze Ripple’s liquid assets until the company pays them what they consider to be their due, according to the UK-based firm.
Also, they requested an expedited legal process and a temporary Ripple.
Facing the lawsuit, Ripple did not wait to give a response. In a recent statement, the company says that they are “disappointed” in the action that Tetragon took.
“We are disappointed as Tetragon is trying to take unfair advantage of the lack of regulatory clarity in the United States. The courts will provide this clarity and we are very confident in our position,” the abovementioned statement said.
Ripple also notes that Tetragon can only opt for the return of its capital “if [the authorities determine] that XRP is a security in the future”, which has not yet happened.
In recent weeks, Ripple received an indictment for the sale of XRP to finance the activities of the company. The SEC considers that asset to be an unregistered security.
Ripple has reportedly raised at least USD 1.3 billion from the sale of XRP since 2013. Besides, the SEC accuses them of having used that asset to pay consideration.
The company stated that it is “a dangerous lack of regulatory clarity” and that the lawsuit is not only against Ripple. They add that it is “an attack on the entire cryptocurrency industry in the United States.”
At the time of writing this article, the third-largest cryptocurrency by market capitalization has accumulated around USD 11 billion, according to data from CoinMarketCap. Its current value is around USD 0.25, equivalent to a decline of more than 50% from the high of USD 0.69 that it recorded in 2020.
As a consequence of the SEC’s lawsuit, multiple exchanges withdrew XRP from their platforms fearing that this cryptocurrency could be illegal.
The exchanges that made that decision include Coinbase, OKCoin, B2C2, OSL, Beaxy, Bitstamp, Galaxy Digital, Jump Trading, 21Shares, CrossTower, Coinbase, Bitwise, Binance, and eToro.
A group of investors in the XRP cryptocurrency filed a petition with a US court for the modification of a complaint that the SEC filed against the technology company. They ask the agency not to consider their XRP holdings as securities.
In conclusion, Ripple and the SEC already have a date for their first appearance in court. On February 22nd, 2021, they will hold a pretrial conference with Judge Analisa Torres of the Southern District Court of New York.
By Alexander Salazar