SEC intends to prosecute Ripple for illegal sales of XRP
Ripple CEO Brad Garlinghouse expects the U.S. Securities and Exchange Commission (SEC) to take the company to court soon. The effect of this announcement is already being felt on XRP, which is falling sharply.
Ripple’s a tough nut to crack. The Securities and Exchange Commission (SEC), the leading financial services regulator in the United States, is taking a hard look at the company and its cryptomony, XRP.
Ripple CEO Brad Garlinghouse recently spoke to Bitcoin Evolution magazine on the subject. He revealed in full transparency that the SEC would be about to sue Ripple issuing XRP as an unregistered security.
The lawsuit is expected to be filed shortly, without a specific date having been disclosed. Brad Garlinghouse and Chris Larsen (co-founder of Ripple) will be named as defendants. For Brad Garlinghouse, SEC Chairman Jay Clayton „has shamefully decided to sue Ripple, leaving the legal work to the next Chairman. »
Jay Clayton has announced that he will be stepping down at the end of the year, six months before the official end of his term. This attack on Ripple would therefore be the last of his entire presidency, launched a few days before he stepped down:
„Today, the SEC has decided to attack [the industry] of cryptography. SEC Chairman Jay Clayton – in his final act – is picking winners and trying to limit American innovation to the BTC and ETH,“ he added.
Ripple has placed the majority of its XRP holdings in escrow in 2017 and regularly sells portions of those funds to institutional investors and on trading platforms. The SEC does not like this particular feature.
However, Ripple maintains that XRP remains independent of its business. As investors in XRP are not shareholders of Ripple, the XRP should not be considered a security, according to Ripple.
A battle begins between Ripple and the SEC
Of course, Ripple does not intend to stop there and intends to defend himself. In particular, Brad Garlinghouse argues that the SEC is wrong:
„The SEC is fundamentally wrong, in law and in fact. XRP is a currency, and does not need to be registered as an investment contract. In fact, the Department of Justice and the Treasury’s FinCEN have already determined that the XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified the XRP as a security,“ he points out.
Ripple’s CEO also spoke on Twitter, saying the company was ready for this battle against the regulator:
„The SEC – out of step with the other G20 countries and the rest of the US government – should not be allowed to choose what innovation looks like (especially when its decision directly benefits China). Make no mistake, we are ready to fight and win – this battle is just beginning. »
As an immediate effect of this announcement, the price of XRP fell by almost -15%, from $0.53 to $0.45. At the time of writing this article, this is the largest drop for a major altcoin in the last 24 hours.
Now that the SEC has Ripple in its sights, it’s hard to imagine how the company could get away without damage. The XRP is already taking a hit, and its downfall could continue as the case progresses.