New York-based blockchain startup R3 has sued rival company Ripple Labs over a contract to purchase Ripple's digital currency XRP, according to a lawsuit filed in the Delaware Chancery Court on Friday.
R3 and Ripple are two of the most well known blockchain companies and are both backed by large banks.
In September 2016 the two companies had entered an agreement giving R3, the right to purchase up to 5 billion XRPs at a price of $0.0085 per unit at any point by September 2019, according to the lawsuit.
In June 2017 Ripple's chief executive Brad Garlinghouse attempted to terminate the options contract through an email to R3's chief executive David Rutter, according to the lawsuit.
R3 alleges that the contract does not give Ripple the right to terminate it unilaterally and is asking the court to declare that it is entitled to all its rights, including purchasing the XRP anytime over the next two years.
Ripple did not immediately respond to a request for comment.
XRP, which is a virtual currency that is traded against the U.S. dollar on cryptocurrency exchanges online, has soared in value to $0.21 since the companies entered in the options agreement, according to CoinMarketCap.com. This would make the option contract worth more than $1 billion.
The lawsuit comes as the value of cryptocurrencies such as XRP and bitcoin continues to rise. Bitcoin, one of the oldest and most established cryptocurrencies has more than quadrupled in value since December to over $4300.
Blockchain, which is best known as the system underpinning bitcoin, is a public online ledger of transactions maintained by a network of computers on the internet. Financial firms hope that the nascent technology can reduce the cost and complexity of burdensome processes such as international payments and securities settlement.
Both R3 and Ripple develop blockchain technology for banks and other financial institutions and had entered the options agreement during discussions about potential collaborations, according to the lawsuit.
R3 launched in September 2015 with the backing of nine of the world’s largest investment and its membership has rapidly grown to about 80 financial institutions. In May it raised $107 million from companies including Bank of America, SBI Holdings, HSBC Holdings, Intel, and Temasek.
Ripple, which focuses on blockchain-based cross border payments, works with many large banks and is backed by firms including Standard Chartered, Accenture, and SBI.