Ripple coins. (Photo: Shutterstock)

Ripple Labs Inc. has been hit with another lawsuit in state court in California claiming the fintech company’s XRP digital tokens, or “Ripples,” should be registered as securities under the state’s Corporations Code.

The lawsuit, which also names Ripple subsidiary XRP II LLC and CEO Bradley Garlinghouse as defendants, claims the company has intentionally “conflated the value of XRP with its other software efforts” to pump up the value of the tokens.

The new lawsuit, which seeks to certify a class of all California XRP purchasers, was filed Tuesday by lawyers at Robbins Arroyo and Robbins Geller Rudman & Dowd in San Mateo Superior Court, a venue viewed as plaintiff-friendly by the securities defense bar. It comes as lawyers for Ripple at Skadden, Arps, Slate, Meagher & Flom and Debevoise & Plimpton—including former SEC Chair Mary Jo White—this week removed a previously filed securities suit against the financial technologies company to federal court.

A Ripple spokeswoman said the suit was “just another example of an extortionist bringing forth an opportunistic suit that lacks merit.”

“We feel confident that the claims regarding XRP are completely unfounded both in law and fact,” she said.

According to the new suit, Ripple founders kept 20 billion of the 100 billion total XRP, which has a market capitalization of $24 billion. The lawsuit claims the company held onto the remaining 80 billion and can sell up to 1 billion XRP per month in what the complaint terms “a never ending ICO. ” The lawsuit claims that the sale of XRP “ dwarfs any other source of revenue” at Ripple, and the defendants sold nearly $92 million worth of XRP in the fourth quarter of 2017 alone.

The Robbins Arroyo and Robbins Geller lawyers argue that XRP should be registered as a security under California law, since its sale is used to fund Ripple’s business activities, its available for sale to the public at large, and its buyers are effectively powerless to control the success of the company or its tokens. The suit seeks an undisclosed amount of damages and the ability to undo prior XRP purchases.

“If defendants fail to create an adequate market for XRP, inadequately or incorrectly manage the XRP Ledger, or there is a loss of confidence in Ripple’s management by the general market, plaintiff and the class members investment in XRP will likely lose money,” the lawyers wrote.

The suit claims Ripple and Garlinghouse, in particular, have fostered confusion in the market by linking the company’s software efforts, aimed at facilitating international transfers between banks, with XRP. The complaint points specifically to a Garlinghouse Twitter post in response to a New York Times reporter who had posted a series of skeptical quotes he’d heard from bankers about whether Ripple’s financial customers would actually buy XRP.

The complaint claims the tweet helps demonstrate the defendants “acted on behalf of the common enterprise, with the expectation of increase (sic) the value of XRP, and thus causing a profit.”

Neither Brian Robbins of Robbins Arroyo nor Shawn Williams of Robbins Geller immediately responded to messages.

The earlier suit, unlike the one filed this week in San Mateo County, included claims under federal securities law. In federal court, securities plaintiffs cannot get discovery until they survive a motion to dismiss.

Robbins Arroyo has previously represented the name plaintiff in the case, California resident Vladi Zakinov, in a federal lawsuit against a dog food maker filed last year claiming his 4-year-old cocker spaniel-poodle mix died from kidney failure after eating the company’s allegedly lead-tainted food. Those claims were tossed by a judge in San Diego who found earlier this year  that they were covered by a previous settlement in a nationwide false advertising class action.