It was all over the news recently and crypto fans were left awestruck when the Securities and Exchange Commission filed an official lawsuit against one of the most ‘credible’ blockchain technology companies ‘Ripple’.
Ripple has been accused of grave wrong-doings by the SEC which in turn has sent the XRP cryptocurrency, one of the vanguards in the crypto-world, tumbling down. As per official data collected by CoinBase, the value of XRP has plunged well over a 40% in the past 24 hours and is down more than 63% from its 30-day high of $0.76. It now rests at $0.27.
SEC’s Allegations Against Ripple
The US Securities and Exchange Commission sued Ripple (the company) along with two top executives named Brad Garlinghouse and Chris Larsen who are the CEO and co-founder of Ripple respectively.
The charges and central complaint of the SEC are that the XRP cryptocurrency is supposed to be treated as a ‘security’ and not a ‘currency. By defying this basic ‘technicality and classification’, Ripple’s CEO Bran Garlinghouse and Co-founder Chris Larsen gained more than $1.38 billion from sales of the XRP token. Out of this, $600 Million worth of the token was personally sold by the two executives named in the lawsuit filing.
In the words of Stephanie Avakian, director of the SEC’s Enforcement Division: “We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system”.
What Is Ripple’s Response?
The company has vehemently objected and denied the allegations of the SEC claiming it has not done anything wrong. It says it will be ‘strongly defending’ itself in court.
Ripple stated that XRP is a ‘currency’ that shouldn’t have to be registered as a security or investment contract. The company regurgitated that US government had previously given the green signal for XRP to be considered a currency. The SEC says XRP is an “unregistered securities offering to investors in the US and worldwide.”
CEO Garlinghouse has written in a blog post that the SEC’s claims were “completely wrong on the facts and law’” and that the company was “confident” they would “ultimately prevail before a neutral fact-finder.”
About Cryptocurrency XRP
XRP, as a cryptocurrency was launched and dispatched by the founders of Ripple in the year 2012. XRP is supposed to facilitate fast cross-border money transfers. Its price has risen in 2020 as the bullish bitcoin rally continues. However, seeing the bigger picture, XRP is still down about 90% from its peak in late 2017.
XRP’s Value Crashes
XRP’s value had fallen by about 22% by early Wednesday, having almost completely wiped out the gains of the past month that took it to two-year highs.
It has also given up its spot as the third-most valuable cryptocurrency in the world, with tether — dollar-pegged token investors often use to trade crypto — surpassing it in value Wednesday, as per data from CoinMarketCap.
