Second Amended Securities Fraud Lawsuit Filed Against Crypto Payment Firm Ryvyl and Executives

News | May 16, 2024 By:

On Wednesday, May 1, 2024, a second amended class action complaint was filed in the United States District Court for the Southern District of California against crypto company Ryvyl Inc, formerly known as Greenbox POS, and three of its former executives.

The amended complaint alleges that the defendants violated securities laws by making false and misleading statements regarding Ryvyl’s financial condition, business operations, and prospects between May 2021 and January 2023. During that period, Ryvyl was focused on developing and selling blockchain-based payment solutions to facilitate transactions using digital currencies and tokens.

Lead plaintiff Scot S. Cook, along with other investors, claim in the complaint that Ryvyl misrepresented issues with its internal financial controls and accounting practices. Several of the company’s quarterly and annual financial statements from 2021 and 2022 had to be restated due to errors. In January 2023, Ryvyl announced investors could no longer rely on its prior financial reports and disclosed additional weaknesses in internal controls.

The individual defendants named in the suit are Ben Errez, the company’s former chairman, Fredi Nisan, the former CEO, and Benjamin Chung, the former CFO. The complaint alleges these executives signed inaccurate certifications about the integrity of Ryvyl’s financial reporting and controls. It further claims their misleading statements about the company’s financial condition and business led to investor losses.

According to the complaint, Ryvyl generated revenue through processing transactions with digital tokens and currencies on its proprietary blockchain networks. The company’s tokens were purportedly backed 1:1 with the U.S. dollar and facilitated payments between consumers and merchants. However, plaintiffs argue Ryvyl did not properly account for these complex cryptocurrency and fintech activities according to Generally Accepted Accounting Principles.

The amended class action seeks damages for investors who purchased Ryvyl’s securities during the class period cited in the suit. It maintains the stock price dropped significantly on the announcements about financial restatements and control issues.

Please contact BlockTribune for access to a copy of this filing.