R3 Holdco LLC – the operating company behind leading US-based blockchain consortium R3CEV – is suing Ripple. Ripple is the development company of the fourth-largest blockchain network in the world with a US$8 billion market cap. The lawsuit has been filed over R3’s previous agreement to purchase Ripple’s native token XRP at a fixed rate over a specified period of time.
Ripple Is Being Sued
According to the lawsuit filed by R3, they and Ripple entered into an agreement in September of 2016 to permit R3 to purchase up to 5 billion XRPs at a fixed price of US$0.0085 over a three-year period. Solely based on the contract, R3 has the right to purchase 5 billion XRPs at a rate that is significantly lower than the current price of US$0.21 until September 2019.
However, Brad Garlinghouse – the CEO of Ripple – attempted to terminate the options contract in an email to R3 CEO David Rutter. This was not permitted per the previous agreement which both companies had signed. Reuters revealed that R3 has demanded a simple request from both Ripple and the court that would allow the firm to retain its rights to purchase XRPs over the next two years.
On the same day – September 8th – Ripple responded with a counterclaim that R3 had violated its previous contracts. The Ripple blockchain network’s operating entity claimed that R3 had not fulfilled its previous agreements, which included a parallel technology partnership agreement that promised Ripple access to R3’s infrastructure and member bank network. In the lawsuit against Ripple obtained by Reuters, R3 also agreed to promote Ripple technology.
The intricacies of Ripple’s lawsuit remain undisclosed and limited to the public. However, Reuters noted in its report that the company is demanding that R3 pay damages determined at trial before attempting to regain rights to its purchasing power over billions of XRPs.
“Our filing is straightforward – R3 misrepresented their ability and intent to deliver on their commitments. Given XRP’s ~4000 percent increase over the course of the year, R3 suddenly wants to tap into the value of XRP, though the facts are clear that they did not earn any option based on our agreement,” a Ripple spokesperson told Reuters in a statement.
In essence, Ripple has accused R3 of violating its parallel technology partnership agreements and failing to provide its network of banks to the company. The company further emphasized that R3 only requested a bulk purchase of XRPs given that the value of XRP has risen by over 4,000 percent in just over a year.
Depending on how the court decides, the two lawsuits could result in Ripple being ordered to grant R3 the power to purchase XRPs, given that R3 agrees to meet its previous parallel technology partnership agreement and pay the damages requested by Ripple.