The United States Securities and Exchange Commission (SEC) has started taking legal action against Ripple for selling unregistered securities for US$1.38-billion through XRP. As a direct consequence, some platforms have started delisting XRP. Its price has also collapsed. The 24-hour price chart shows that the price of XRP against the US Dollar (XRP/USD pair) has till now dropped by over -26% from US$0.484881 to US$0.355167.
SEC Files Lawsuit against Ripple
The United States Securities and Exchange Commission has filed against Ripple, CEO Brad Garlinghouse, and its co-founder Chris Larsen for allegedly carrying out an unregistered sale of securities amounting to US$1.38-billion via their cryptocurrency XRP.
The complaint alleges: “Ripple has raised funds, starting in 2013, through the sale of digital assets known as XRP in unregistered securities offering to investors in the United States and around the world. Ripple is also said to have distributed billions of XRP in exchange for non-monetary consideration, such as labor and market-making services.”
Reports say that the SEC has underscored the point that Brad Garlinghouse, as well as Christ Larsen, have personally sold an estimated US$ 600 million worth of XRP and both of them have failed to record their personal XRP sales.
SEC has been reportedly keeping an eye on Ripple for a long time now. In fact, the company had also been warned by the SEC before the public rollout of its project: “Ripple engaged in this illegal offering of securities from 2013 to today, although Ripple received legal advice as early as 2012 that under certain circumstances XRP could be considered an ‘investment contract’ and therefore as a security under federal securities laws.”
However, Brad Garlinghouse, the CEO of Ripple, has said that the SEC is wrong. He went on to say that SEC’s actions against Ripple are not only an attack on Ripple but essentially directed against the entire cryptocurrency industry. Garlinghouse has even said that the Securities and Exchange Commission is trying to curb cryptocurrency-related innovations. He warned the crypto industry that what is happening with it now will also happen with other cryptocurrencies and will affect various companies in the ecosystem.
After SEC’s legal action against Ripple, OSL (the world’s first and only insured and SFC-licensed digital asset platform based in Hong Kong) has suspended all trading markets that include XRP until further notice. However, it is still not clear whether other trading platforms would also take similar actions. Many believe that XRP is likely to be delisted in all exchanges that have branches in the US to avoid offending the regulators. If the largest cryptocurrency exchanges such as Binance or Coinbase delists XRP then the result will be catastrophic for the cryptocurrency.