Ripple Labs Inc., whose XRP token is the world’s third-largest cryptocurrency, was sued by a U.K. investment company after the U.S. Securities and Exchange Commission claimed the virtual tokens were sold improperly.
Tetragon Financial Group Ltd., with total assets of $2.32 billion, filed the complaint under seal Monday night in Delaware Chancery Court. In concurrent filings that are public, the investment company said it seeks to “enforce its contractual right to require Ripple to redeem” Series C preferred stock held by Tetragon and to block Ripple from using any cash or other liquid assets until the payment is made.
Tetragon also asked the court for a temporary restraining order, a preliminary injunction and an expedited trial. Its briefs in support of the requests also are sealed.
Representatives of Ripple and of Tetragon didn’t immediately respond to requests for comment.
Coinbase Inc., the biggest cryptocurrency exchange in the U.S., said last week it would stop selling XRP to the public after the SEC sued Ripple, alleging it misled investors by selling more than $1 billion of the virtual tokens without registering with the agency. Coinbase is the target of a proposed class-action lawsuit seeking to recover commissions paid on XRP trades, alleging the company knew the tokens qualified as securities.
That lawsuit, in San Francisco federal court, came about two weeks after Coinbase filed what’s expected to be the U.S.’s first crypto-related initial public offering, a watershed moment for the industry in gaining mainstream recognition. Bitcoin, the best-known cryptocurrency, is trading at all-time highs, rising above $32,000 Tuesday morning in New York. Bitcoin, according to JPMorgan Chase & Co., has the potential to reach $146,000 in the long term as it competes with gold as an asset class.
The case filed Monday is Tetragon Financial Group Ltd. v. Ripple Labs Inc., 2021-0007, Delaware Chancery Court.
— With assistance by Joel Rosenblatt