Ripple and R3, which have each raised about $100 million in venture capital funding, have sued one another. The dueling lawsuits relate to a contract dispute that stems back to last year’s much-touted partnership between the two fintech firms.
The core of the disagreement centers on an options contract that gave R3 the right to purchase up to 5 billion XRP for $0.0085 per unit–or $42.5 million for the entire amount–until September 2019. The XRP price has surged more than 3,000% to about $0.21 in 2017, meaning that the options contract is now worth more than $1 billion. XRP has crossed $0.30 several times in recent months, which would make the contract worth as much as $1.5 billion.
R3 initiated the litigation by suing Ripple in the Delaware Chancery Court, reportedly claiming that the San Francisco-based firm violated the agreement by terminating the options contract in June of this year. R3 asked the court to compel Ripple to honor the contract and sell them the XRP for the now rock-bottom price of $0.0085. CCN reached out to R3 for further comment, but the company declined, stating:
R3 does not discuss the details of pending litigation. We are confident in our position and hope for a speedy resolution of this matter.
Ripple Countersues R3
Shortly afterward, Ripple filed a countersuit against R3 in the Supreme Court of California. A company spokesperson told CCN in a statement that, based on the partnership agreement, R3 did not earn the XRP option because the firm did not deliver on its commitments:
Our filing is straightforward – R3 misrepresented their ability and intent to deliver on their commitments. Given XRP’s ~4000% 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.
Ripple provided CCN with a copy of their complaint, which alleges that R3 fraudulently and/or negligently misrepresented material facts to induce Ripple to enter the agreement. These alleged misrepresentations included the strength of R3’s consortium roster, Ripple’s access to that roster, and R3’s intention to form a commercial partnership designed to promote XRP.
The filing maintains that R3 misrepresented the membership of its consortium during the negotiation phase. Shortly after the agreement was struck, several major financial institutions–including Goldman Sachs and JP Morgan–exited the consortium. The complaint argues that R3 must have been aware of the departures yet hid this during the agreement negotiations.
Despite offering assurances that R3 desired to commercialized the partnership, the filing also claims that R3 reneged on its partnership obligations by declining to promote Ripple and even publicly-disparaging XRP in front of its consortium members. Meanwhile, R3 devoted its entire attention to its own fundraising and claimed to be completely unaware of the state of XRP long after the partnership had begun.
Based on these alleged causes of actions the suit asks the court to compel R3 to pay punitive damages to Ripple and cover the firm’s court costs.