Things look grim for Ripple as Tetragon, a former investor in the company, has turned against it, filing a complaint against the fintech firm.
UK investment company Tetragon Financial Group Ltd. issued an official complaint against Ripple with Delaware Chancery Court. The financial firm has been a major investor in Ripple’s $200 million Series C round in 2019 but has decided to pursue Ripple in court, shadowing the Securities and Exchange Commission’s lawsuit against Ripple for unregistered securities offering through XRP. The Commission alleges that XRP should be classified as a security and that Ripple has violated the Securities Act of 1933 by profiting from XRP sales, reaping $1.3 billion in profit.
In Tetragon’s complaint, it demanded that Ripple reclaim its equity under the Series C investment agreement with Tetragon and asked that Ripple’s assets and liquidity be frozen until a payment has been issued. Under the Series C investment agreement, if XRP is considered a security, Ripple is required by law to redeem their Ripple equity held by Tetragon, if the latter demands it.
Additionally, Tetragon has requested for a temporary restraining order, a preliminary injunction, as well as an expedited trial against Ripple, according to Bloomberg.
Ripple says the lawsuit has no merit
Ripple has addressed the lawsuit, and argued that the lawsuit had no basis, as a conclusion has not yet been reached in court to place XRP definitively in the securities basket.
It explained, “In Ripple’s Series C investment agreement, there is a provision that if XRP is deemed to be a security on a go forward basis, then Tetragon has the option of having Ripple redeem their Ripple equity.” As a conclusion has not yet been reached by the SEC lawsuit alleging XRP is a security, Ripple said that Tetragon’s lawsuit had “no merit.”
XRP loses Grayscale Investments’ support
Rather, the fintech firm expressed its disappointment in its affiliate, saying that Tetragon was taking advantage of the fact that there was a lack of regulatory clarity in the US to strong-arm Ripple.
XRP’s outlook remains fairly uncertain, as its operations inside the US may be inhibited by the Securities and Exchange Commission’s lawsuit. Currently, it has been unseated as the third-largest cryptocurrency by market capitalization by Litecoin, as it continues decreasing in value. Many leading crypto exchanges and funds have moved to delist XRP, with Grayscale being the latest one.