That SEC lawsuit sure is scaring people away from Ripple.  The lawsuit that has been filed by the Securities and Exchange Commission (SEC) versus digital payments firm Ripple is heading to virtual court on Feb. 22, 2021 per legal documents filed in the U.S. District Court of the Southern District of New York.

Ripple Labs, CEO Bradley Garlinghouse and Executive Chairman and Co-founder Christian Larsen are named in the suit.  The parties were asked to file a joint statement on Feb, 15, 2021 through their legal counsels.

Ripple have previously stated that “countless innocent XRP retail holders with no connection to Ripple” and have “needlessly muddied the waters” for the industry.

The allegation from the SEC versus Ripple is that two of its executives — Garlinghouse and Larsen — raised more than $1.3 billion in an unregistered securities by providing digital coin XRP.  Also, the SEC considers XRP a security, but Ripple maintains that XRP is electronic money. 

The SEC have also stated that XRP cannot be considered as a currency as it’s not backed by a central government and therefore not legal tender.

Brad Garlinghouse previously stated that he was warned in that he was limited about what he could say about the allegation as the case is ongoing. This he stated to a news site when they questioned if Ripple tried to settle charges before the federal regulator sued Ripple.

Previously, when Brad was questioned if Ripple paid exchanges to list XRP, he stated that “Ripple has no control over where XRP is listed.” 

Ripple (XRP) Tetragon Issue

Tetragon Financial Corporation, a UK investment company with total assets of $2.32 billion filed a complaint on Ripple in Delaware Chancery Court.

Tetragon have filed this complained to “enforce its contractual right to require Ripple to redeem” their Series C preferred stock which is held with Ripple by Tetragon and to further block Ripple from using any cash or other liquid assets until the payment is made.

They have required the court to facilitate a temporary restraining order, a preliminary injunction and an expedited trial.

Ripple have refused the merits of the Tetragon lawsuit by further clarifying that there is no determination that XRP is an unregistered security like the claims of the SEC.

Of note, the investment agreement states, Tetragon can redeem its Ripple equity “if XRP is deemed to be a security on a go-forward basis.”

Will the courts provide clarity on whether XRP is a currency or security? And, if they several other investors will also follow suit Tetragon.