by SignalFactory · December 22, 2020 | 09:27:56 UTC
Ripple, the fintech company best known for cryptocurrency XRP, has said it expects to be sued by the Securities and Exchange Commission over allegations that it violated investor protection laws.
The SEC is set to bring a lawsuit against Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen. It will claim that the company violated laws against selling unregistered securities when it sold XRP to investors.
Garlinghouse said he expects the lawsuit to be filed before Christmas. In a statement late Monday, he said the SEC’s suit was “fundamentally wrong as a matter of law and fact” and questioned its timing.
“XRP is a currency and does not have to be registered as an investment contract,” Garlinghouse said. “In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.”
“The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration. Instead of providing a clear regulatory framework for crypto in the U.S., (SEC Chairman) Jay Clayton inexplicably decided to sue Ripple — leaving the actual legal work to the next Administration.”
Why does the lawsuit matter?
With a market cap of more than $20 billion, XRP is one of the world’s most valuable cryptocurrencies. It was created and distributed by the founders of Ripple in 2012 and is designed to facilitate fast cross-border payments.
According to Ripple, the SEC plans to argue XRP is a security and that Ripple violated U.S. laws by not registering the token with the SEC before listing it.
The agency has won other high-profile civil suits against start-ups Block. one and Kik, which it says violated securities laws by raising money through a controversial fundraising method known as an initial coin offering.
Ripple maintains that XRP — like bitcoin — should be classified as a currency and does not have to be registered as an investment contract. The company was last privately valued at $10 billion and is backed by the likes of Japanese financial services giant SBI Holdings, Spanish bank Santander and top venture capital firms including Andreessen Horowitz, Lightspeed, and Peter Thiel’s Founders Fund.
The “security” label matters because it could bring XRP under strict new rules, and that could heavily impact Ripple. Though it claims to be independent of the cryptocurrency, Ripple owns 55 billion of the totals 100 billion XRP tokens in existence. The company even makes revenue from selling some of its XRP holdings each quarter.
Ripple has threatened to move its headquarters outside of the U.S. over the issue, with London, Switzerland, Singapore, Japan, and the United Arab Emirates tipped as potential locations.
XRP declined sharply following news of the expected SEC suit. The cryptocurrency fell over 17% Tuesday, to trade around 46 cents.
Like many other digital coins, XRP has spiked in value this year as major investors and companies have warmed to cryptocurrencies such as bitcoin. XRP is still up around 140% year-to-date.
All information on this website is of a general nature. The information is not adapted to conditions that are specific to your person or entity. The information provided can not be considered as personal, professional or legal advice or investment advice to the user.
Signal Factory is not represented as a registered investment consultant or brokerage dealer nor offers to buy or sell any of the financial instruments mentioned in the service offered.
While Signal Factory believes that the content provided is accurate, there are no explicit or implied warranties of accuracy. The information provided is believed to be reliable; Signal Factory does not guarantee the accuracy or completeness of the information provided. Third parties refer to Signal Factory to provide technology and information if a third party fails, and then there is a risk that the information may be delayed or not delivered at all.
All information and comments contained on this website, including but not limited to, opinions, analyzes, news, prices, research, and general, do not constitute investment advice or an invitation to buy or sell any type of instrument. Signal Factory assumes no responsibility for any loss or damage that may result, directly or indirectly, from the use or dependence on such information.
All information contained on this web site is a personal opinion or belief of the author. None of these data is a recommendation or financial advice in any sense, also within the meaning of any commercial act or law. Writers, publishers and affiliates of Signal Factory are not responsible for your trading in any way.
The information and opinions contained in the site are provided for information only and for educational reasons, should never be considered as direct or indirect advice to open a trading account and / or invest money in Forex trading with any Forex company . Signal Factory assumes no responsibility for any decisions taken by the user to create a merchant account with any of the brokers listed on this website. Anyone who decides to set up a merchant account or use the services, free of charge or paid, to any of the Forex companies mentioned on this website, bears full responsibility for their actions.
Any institution that offers a service and is listed on this website, including forex brokers, financial companies and other institutions, is present only for informational purposes. All ratings, ratings, banners, reviews, or other information found for any of the above-mentioned institutions are provided in a strictly objective manner and according to the best possible reflection of the materials on the official website of the company.
Forex trading is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against merchants. Before each Forex investment, you should carefully consider your goals, past experience and risk level. The opinions and data contained on this site should not be considered as suggestions or advice for the sale or purchase of currency or other instruments. Past results do not show or guarantee future results.
Neither Signal Factory nor its affiliates ensure the accuracy of the content provided on this Site. You explicitly agree that viewing, visiting or using this website is at your own risk.