The basis of the lawsuit dates back to Ripple's former CEO and co-founder Chris Larsen. Back in 2016 he signed an agreement with a company called "R3", a banking consortium.
In that deal, R3 claims there was a clear "option contract" - which gave the company the right to buy up to 5 billion XRP coins, at a locked in price of less than a penny.
Ripple's defense revolves around the contract being invalid, stating R3 grossly misrepresented their abilities as a company. Claiming R3's CEO hyped up partnerships with Morgan Stanley, Goldman Sachs, and J.P. Morgan - when in reality, those companies were in the process of actually ending their relationships with R3.
"R3 had misrepresented its resources and current ability to perform solely to induce Ripple into executing the Agreements. For example, although R3 represented to Ripple that it would have access to its large consortium of leading banks, R3 knew and had reason to know that several key banks that would be instrumental to Ripple’s success would soon be departing from its consortium." Ripple said in their counter-claim against R3.
R3 says it's much more simple - Ripple just wanted to cut them out now that they weren't needed, stating Ripple wanted out of the agreement once they were “in the money.”
Giving more worry to Ripple's hopes of winning - a San Francisco court just denied Ripple's appeal. Because of this, the case heads to R3's home of New York next.
Currently, R3 is pushing a competing product, also aimed at banks - blockchain software called "Corda".
Author: Mark Pippen
London News Desk
