The Missouri-based plaintiff, Thomas Sandoval, filed a lawsuit against Coinbase claiming the exchange had been illegally selling XRP knowing the asset might be considered as securities.
According to Sandoval, Coinbase knew that XRP "was not a commodity, but rather a security under federal securities laws." However, the exchange continued offering XRP to the public and charged commissions for the sales.
"XRP is a security and not a commodity because Ripple Co. has sole control over the purported cryptocurrency's "nodes," and is therefore a common enterprise for purposes of the federal securities laws," the lawsuit states.
Earlier this week, Coinbase reported the imminent suspension of XRP trading for users in all regions where it offers its services.
According to the platform, the XRP markets were put into "limit only" mode on December 28 and will be completely closed by Coinbase on January 19. At the same time, customers will still be able to access their wallet. They will also be able to receive Spark tokens as part of the planned airdrop.
Coinbase's decision to close XRP trades comes after the US Securities and Exchange Commission (SEC) submitted a lawsuit against Ripple, in which it accused the company of unregistered offering of securities. The SEC says Ripple undertook distribution of the XRP tokens without registering offers and sales of XRP with the SEC.
Ripple says the SEC's submission of a lawsuit against Ripple is an attack on the "entire crypto industry" in the US. The company highlights there has always been a "dangerous lack of regulatory clarity" for the market in the US.
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