A man claiming to be a Coinbase customer has filed a lawsuit against the exchange for allowing the sale of XRP on the cryptocurrency exchange in an event where the SEC has filed a lawsuit to challenge the legality of the digital asset.
Plaintiff Thomas C. Sandoval filed the lawsuit in the Northern District Court of California. He alleges that Coinbase participated in the sale of XRP and made a profit from it, knowing it was an unrecorded security.
One section of the complaint says:
“Coinbase sold a token called Ripple (hereinafter its trading symbol: XRP), the value of which was completely tied to the success or failure of Ripple Labs, Inc. (Ripple Co.) company that created the token, and the management efforts of Ripple Co. executives XRP investors, like the plaintiff, placed an expectation of profit on such managerial endeavors by Ripple Co. executives and bought the token to make money on their investment. "
The lawsuit also alleges that Coinbase enjoyed unfair advantages over other exchanges that only sold products that violate California's unfair competition law.
This lawsuit against Coinbase comes just a week after the SEC filed a lawsuit against Ripple and its top executives. The lawsuit claims that Ripple has been selling an unregistered security (XRP) for more than seven years without registering it or seeking an exemption.
Although Coinbase suspended XRP trading on Monday as a result of the SEC's lawsuit, the plaintiff is seeking compensation for damages, attorney's fees and any other punishment the court deems necessary.