Sadly, this difficult year isn’t ending very well for Ripple Inc. and its native cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are..., XRP. The U.S. Securities and Exchange Commission (SEC) just revealed a lawsuit against the company for allegedly having carried out a “$1.3 Billion Unregistered Securities Offering”, as they name the financial activities with Ripple and XRP since 2013.
According to the press release by SEC, the legal action goes specifically against the firm, but also Christian Larsen, the company’s co-founder, executive chairman of its board, and former CEO; and Bradley Garlinghouse, the company’s current CEO. For them, XRP it’s considered now a security, and the company raised non-authorized funds from U.S. investors.
They allege too that Larsen and Garlinghouse, “effected personal unregistered sales of XRP totaling approximately $600 million”. These would also have legal consequences and would violate the Securities Act of 1993.
Stephanie Avakian, Director of the SEC’s Enforcement Division, commented about it:
“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.”
As a direct consequence of the announcement, XRP price has plunged almost 40% in around two days and is still in red numbers. This bad news comes after a good rally in November when the currency earned 137%+.
An attack on Ripple, XRP, and crypto-industry
As an answer, Garlinghouse published a letter defending the company and its position. He claims that other U.S. governmental branches never considered Ripple and XRP as a security but as a currency, including the Justice Department and the Treasury Department’s FinCen.
Additionally, he stated that this is nothing more than a late attack not only on Ripple and XRP but on the entire crypto-world in the country.
“We will aggressively fight – and prove our case – through this case we will get clear rules of the road for the industry here in the U.S (…) Let me be clear: Ripple, Chris, and I may be the ones named in the filing, but this is an assault on crypto at large. In this case, XRP is a proxy for every other ‘alt-coin’ in the space. From there, you have a snowball effect (…) This sets a terrible industry-wide precedent for any company working with a digital asset [in the country].”
Despite the statement, Garlinghouse also admitted that this sudden attack brought to them a “greater sense of urgency” to move their HQ outside the United States. However, there are still hopes, and some experts and lawyers think that this it’s just a temporary stumbling for Ripple and XRP.
Featured Image by Leandro Aguilar / Pixabay
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