- Tetragon Financial Group is suing Ripple for redemption of Series C preferred stock.
- In a brief statement, Ripple dismissed the lawsuit as without merit.
Following the SEC lawsuit against Ripple Labs for selling an unregistered security, the bad news for the company is not abating. With Tetragon Financial Group, one of the main investors has filed a lawsuit to, among other things, to “enforce its contractual right to require Ripple to redeem Series C preferred shares.” The legal basis for the redemption is said to be the lawsuit filed by the U.S. Securities and Exchange Commission.
The UK-based investment firm led Ripple’s 200 million Series C funding round in December 2019. The funds raised at that time were officially used to improve the XRP ledger and expand the utility of the XRP token.
As Bloomberg reported, Tetragon filed the lawsuit against Ripple Labs in Delaware Chancery Court on Monday. In addition to redeeming the funds, Tetragon is also asking that Ripple prohibit the use of cash or other liquid assets until payment is made.
In addition, the investment company asked the court for a temporary restraining order, a preliminary injunction and an expedited trial. The briefs in support of the requests are sealed.
Ripple dismisses the filing as baseless
In a brief and terse response to Tetragon’s lawsuit, Ripple dismissed any legal basis for the claim. As the payment solutions company states, there is a clause in the Series C investment agreement that states Tetragon has the option of having Ripple redeem their Ripple equity by Ripple if XRP is classified as a security on a go-forward basis.
“Since there has been no such determination, this lawsuit has no merit,” the official statement said. In addition, Ripple also expressed its disappointment with this action:
We are disappointed that Tetragon is attempting to unfairly exploit the lack of regulatory clarity here in the US. The courts will provide that clarity and we are very confident in our position.
As CNF reported, the first pretrial date for the SEC v. Ripple case is set for Feb. 22. According to Abra CEO Bill Barhydt, it is likely that the court battle with the U.S. Securities and Exchange Commission will end in a settlement because of mistakes made by both sides. In particular, the SEC’s prolonged hesitation and inaction argue against the SEC winning in court. “They should have settled this six years ago,” Barhydt said.