The Delaware Chancery Court has approved a temporary restraining order against Ripple Labs Inc. on behalf of an investor, which seeks to stop any further XRP purchases until the investor can sell back its stock.
According to reports, the court approved the bid from investor Tetragon to prevent Ripple from buying any more XRP, or redeeming other investor stock, until Tetragon’s stake had been redeemed.
Tetragon has said the action was brought following an investigation into Ripple by the U.S. Securities and Exchange Commission (SEC), which found the firm had engaged in the sale of an unregistered security by selling $1.39 billion in XRP since 2013.
In a teleconference ruling, Vice Chancellor Zurn said Tetragon had “bargained for a prompt redemption right in the event of a default, presumably to capture value before it evaporates,” before “the plug was pulled out of the bathtub and value started to go down the drain.”
While viewing the request for a total halt as “heavy handed,” the judge ordered a net zero requirement on Ripple, effectively forcing them to maintain the same net position without necessarily preventing individual sales – described as a “less burdensome way” of restraining the activities of Tetragon.
Attorney David M. Grable, representing Ripple, denied the order should have been granted, saying “this is a textbook case for no TRO. What Tetragon wants is the payment of money, a quintessential reparable harm case.”
According to Grable, even the investor had noted that the firm “has the ability to pay what Tetragon claims it is owed many times over. Tetragon alleged that Ripple has millions of dollars on hand and billions of pledgeable assets, digital assets, XRP.”
The restraining order is the latest action to succeed against Ripple, following the SECs investigation and findings published in December 2020.
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