Along with the new heat facing Ripple from the Securities and Exchange Commission, one of its biggest investors has turned against it as well.
Currently, Tetragon is suing Ripple to compel it to redeem its stock. In order to prosecute the fintech company in court, the multi-billion asset manager, who initially led Ripple’s $200 million Series C funding round in 2019, has now entered the SEC. Tetragon argued in a complaint brought before the Delaware Chancery Court that it was rightfully entitled to demand that Ripple recover its equity under the arrangement set out in the Series C clause.
Under the provision, an arrangement was reached between the two companies that Tetragon would be able to claim a stock redemption and a refund from Ripple if XRP was deemed a security. At present, the latter argued that the current Tetragon litigation had no merits because XRP was not officially ruled by the court as a defense.
Tetragon’s legal team accused Ripple of playing “word games” in an official report to bypass a possible order from the Delaware Chancery Court to suspend its cryptocurrency transactions before it reclaims Ripple’s $175 million stock from Tetragon. Ripple was accused by Tetragon counsel Michael Shuster of misrepresenting the prior agreement between the two parties.
The plea of Tetragon with the Delaware Chancery Court to freeze the liquidity of Ripple entirely until a refund has been made resulted in a temporary restraining order against the fintech company. Ripple is currently limiting its XRP revenues by holding a net zero position in XRP sales and acquisitions before Tetragon can liquidate its shares in Ripple.
With the first court date scheduled for February 22, in a joint letter, the SEC and Ripple told the court that, at least for the time being, a settlement was not going to happen. Attorney Jeremy Hogan had previously commented on the letter, noting that the points put forward by Ripple in the letter were well articulated and better than the SEC’s.
It has been two months since Ripple Labs was slapped with an XRP complaint by the SEC. The Commission accuses Ripple and its executives of selling unregistered securities with XRP. A key turning point for the cryptocurrency industry as a whole will be whether XRP will be ruled by the US court as a safe, as it can pave the way for how other digital currencies are categorized in the nation.