- Tetragon accuses Ripple of failing to correctly state the terms that would require the company to comply with a $180 million settlement.
- Tetragon’s legal representation, Michael S. Shuster accuses Ripple of playing “word games”.
A report from QLaw360, provides an update on the lawsuit filed by Tetragon against Ripple Labs. The latter has sought to have the lawsuit dismissed in Delaware Chancery Court and has therefore been accused by Tetragon of using “word games.”
The lawsuit filed by U.K.-based asset management firm Tetragon against Ripple stems from the U.S. Securities and Exchange Commission’s (SEC) action. The regulator accuses Ripple Labs of making an unregistered sale of a security, in this case the token XRP. In response, Tetragon filed a lawsuit to assert claims against Ripple, as CNF reported.
QLaw360 now reports that Tetragon’s legal representation, Michael S. Shuster from Holwell Shuster & Goldberg LLP, has told Vice Chancellor Morgan T. Zurn that Ripple is “misrepresenting” an agreement between the parties. The agreement, signed in 2019, sets out terms that require Ripple to fulfill debt obligations to Tetragon shareholders.
The investment firm led a funding round with about $200 million in a Series C in 2019. Those funds were used to make improvements to the XRP Ledger and improve the use cases that operate with XRP. Tetragon claims that it is entitled to receive a refund of its investment under a clause, should XRP be classified as a security in the United States.
However, Ripple has dismissed the allegations by the investment firm and believes that it is only seeking to obtain “a quick redemption.”
As reported by CNF, the Delaware Chancery Court issued a temporary order to restrict Ripple’s trading in XRP, cryptocurrencies, and its ability to redeem shares. This order will be in effect pending a ruling from the court on Tetragon’s claims.
The problem with XRP?
The SEC lawsuit has received many predictions from experts both for and against Ripple. Some believe the legal process will inevitably end in a settlement. However, on the less optimistic side attorney Stephen Palley, who stated yesterday:
The problem w/ XRP is that no matter how it’s spun it will always be reducible to a centralized thing w/ little credible utility and large cash payouts to the small number of people who created, control the thing, and keep getting rich from it.
Palley believes the payment solutions company will lose the lawsuit if the process reaches the next stages: dispositive motions, trial, or appeal. In contrast, attorney Jeremy Hogan believes Ripple “has destroyed the SEC’s arguments” in a recently released joint letter.
With a deadline of August 16, 2021, to close the “discovery phase,” Ripple appears to still have room to maneuver. A change in the regulator’s chairmanship could have positive consequences for Ripple as the company hinted several times. For the time being, all scenarios seem valid.