The year is 2016 and Ripple has decided to sign a contract with the R3 blockchain consortium. Under the agreement, R3 was allowed to purchase 5 billion XRP at $ 0.0085, valued at approximately $ 42.5 million. R3 would have until September 2019, three years after the agreement was signed, to accumulate the 5 billion units.
Now it’s 2018 and those 5 billion XRPs are worth over $ 10 billion, with Ripple’s current market price being $ 2.05. And the two companies are in a legal battle over this agreement as both sides believe the other has betrayed them.
Legal proceedings date from July 2017 after Ripple manager Brad Garlinghouse tried to terminate the agreement. At the time, XRP was trading for around $ 0.26 per coin, which is more than $ 1 billion worth of the contract amount. R3 sued Ripple following Garlinghouse’s decision, stating that the agreement cannot be terminated unilaterally. With the lawsuit, R3 demanded that Ripple honor the original terms of the contract and allow them to purchase the 5 billion XRP at $ 0.0085 each.
The original proceedings came to a head in October 2017 when a Delaware court dismissed the case Garlinghouse booked as a win for Ripple. Than however Article from October Fortune Submitted, an anonymous person associated with the case admitted that the Delaware court refused to open the case but that the litigation would continue in California.
After happiness, Ripple launches litigation in a new campaign. Last week, Ripple Counterclaim filed against R3 with the New York State court system, arguing that R3 maliciously signed the deal. Ripple claims that R3 only accepted the deal to gain inside knowledge of Ripple’s product so that they could replicate it.
The counterclaim came immediately after Ripple hit a staggering all-time high of $ 3.79, bringing the contractual arrangement in question to nearly $ 19 billion.
In the legal document, Ripple sets out the reason for filing their case:
“This is about the misrepresentations, omissions, half-truths of R3 and the failure to keep his promises. By hiding and shading the truth, top R3 executives led Ripple and XRP II to do business with R3. As a result, Ripple shared with R3 sensitive, proprietary, confidential, and trade secrets about Ripple’s cross-border payment solutions under a nondisclosure agreement that Ripple believed R3 would uphold … and clear promises it made to Ripple and XRP II. “
An example of the misrepresentation of R3, according to Ripple, is that “although” R3 advocated Ripple that it would have access to its large consortium of leading banks, R3 knew and had reason to believe that several key banks that would be critical to Ripple’s success would soon leave its consortium. ”These banks include JP Morgan, Goldman Sachs and Morgan Stanley.
Consistent with the company’s failure to comply with contractual obligations, Ripple believes that R3 failed to “help” Rippe. [in signing] a single bank. ”
In this case, Ripple will seek an undisclosed settlement for damages. Given the complexity of the case – and the complication of Ripple’s rising rating – it remains to be seen who has the stronger case in the process. It will likely come down to whether or not R3’s lack of transparency is material with Ripple, McGill University law professor Stephen Smith told Fortune:
“If [R3’s] her only duty was to provide assistance, and she has violated that duty in a significant way (the latter limitation is important because that duty could be negligibly violated), z me. “
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