Ripple Labs announced on September 10, 2018, that a settlement has been reached with R3. R3 brought suit against Ripple alleging the real-time financial settlement giant was refusing to honour a prior written agreement to give R3 the option of buying up to 5% of the XRP token supply at a price that was very quickly becoming far below market value.
Respite for Ripple
It was a very brief announcement that was released by Ripple Labs this Monday, stating that a deal had been cut with tech giant R3, ending all legal disputes between the two parties.
The case, which was being argued in courts in New York, saw R3 allege that Ripple Labs was refusing to honour a purchase agreement, which contained an option for R3 to purchase up to 5 billion RPX tokens at a price of $0.0085 each.
In September 2017, when the suit was filed, the market price of RPX was between $0.20 and $0.25, or about 30 times higher than the price at which had Ripple had agreed to sell the tokens. Although prices for the token have now returned to sub $0.30, at the height of the bull run they reached over $3 each.
A Year in the Making
The lawsuit was drawn out in part by a countersuit by Ripple brought in California, alleging that R3 had broken against other clauses in the agreement – in which case R3’s case in New York would have lost much credibility.
The countersuit was dismissed, however, as was the appeal against the dismissal. Seeing its options dwindling, it appears Ripple Labs has now entered into a settlement with R3.
Although the terms of the settlement are confidential, it seems likely R3 will be allowed to purchase at least some of the 5 billion tokens for far below market price. With a total supply of just under 100 billion tokens, those 5 billion represent a significant chunk of all XRP tokens that will ever exist.
This is not the first time Ripple Labs has found itself in court. In May of this year, investor Ryan Coffey brought a class action lawsuit against the company, alleging that Ripple’s XRP sales had violated US securities laws.
Ripple’s position is that XRP is not to be considered a security, and that therefore securities trading laws do not apply. Due to regulatory complexities, Ripple is very far from alone in wishing to avoid the securities label, a spectre that looms in the back of the mind for most crypto project that have held token sales in the past.