A major Ripple investor is suing to force the international payments firm to buy back its investment in the wake of the Securities and Exchange Commission’s lawsuit calling XRP an unregistered security.
In December 2019, asset manager Tetragon Financial Group led Ripple’s $200 million Series C investment round. Now, it is seeking to enforce a contractual provision to back out of its investment, Ripple said in a public statement on Jan. 5.
Noting that “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,” the international payments firm said that the lawsuit is without merit as “there has been no such determination.”
The Dec. 22 SEC lawsuit has hammered XRP, driving its price down more than 50% in the weeks since it was filed. XRP is currently selling for about $0.23. Many—but not all—U.S. exchanges have suspended or delisted the cryptocurrency, which has dropped from third-largest by market capitalization before the suit to No. 5 today, after bitcoin, ether, tether and now litecoin, according to CoinMarketCap.
“We are disappointed that Tetragon is seeking to unfairly take advantage of the lack of regulatory clarity here in the U.S.,” Ripple said. “The courts will provide this clarity and we are very confident in our position.”
Ripple will vigorously defend itself against the SEC charges, CEO Brad Garlinghouse has promised.
Other Ripple partners have been more supportive. The CEO Japanese financial powerhouse and Ripple partner SBI Holdings said his firm “remains a steadfast partner to Ripple, and looks forward to expanding together in Asia.”
Noting that Japan’s Financial Services Agency has already declared that XRP is not a security, SBI’s Yoshitaka Kitao tweeted, “I’m optimistic that Ripple will prevail in the final ruling in the US.”