United States Securities and Exchange Commission (SEC) has unveiled a suit against Ripple, the US-based cross-border payment firm and its top executives, including Brad Garlinghouse and Chris Larsen, for the sale of $1.3 billion worth of XRP over the last seven years.
As a report has it, the charges were filed in federal district court in Manhattan. In the suit, SEC alleges that the digital token XRP is classified as a security and accuses Ripple and the above mentioned top executives of raising over $1.3 billion through an “unregistered, ongoing digital asset securities offering” to investors since 2013.
Also, the commission alleges that the blockchain payment firm distributed the fourth-largest cryptocurrency by market capitalization, XRP, for labor and market-making services. While the CEO Brad Garlinghouse and co-founder Chris Larsen are accused of failing to register their respective sales of XRP, which relatively worth $600 million.
According to the director of the SEC’s Enforcement Division, Stephanie Avakian, these actions “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.”
Brad Garlinghouse Says XRP Is Not the Only Target
Based on SEC’s regulation, cryptocurrency-related firms and individuals are obligated to register their offerings with the commission or under an exemption if they qualify as securities.
Howbeit, nobody is still sure of the tokens that are securities in relation to SEC’s point of view. This remains one of the most discussed topics in the cryptocurrency ecosystem.
While reacting to the new development on Twitter, Brad Garlinghouse said:
“I appreciate you saying what this could mean for the larger U.S. crypto industry. The SEC is doing the opposite of “fostering innovation” here in the US. It’s not just XRP they’re attacking here.”
Despite the gravity of the suit, the CEO of SBI Holdings, who doubles as Ripple board member, Yoshitaka Kitao, remains optimistic that Ripple will prevail eventually:
“Japan’s FSA has already made it clear that XRP is not a security. I’m optimistic that Ripple will prevail in the final ruling in the US. SBI Holdings remains a steadfast partner to Ripple, and looks forward to expanding together in Asia.”
On the other hand, the CTO of Ripple, David Schwartz, who sounded less hopefully compared to Kitao’s optimistic comment, said:
“The United States is one of the few countries where regulators will, after years of you operating in full light of day and frequently updating them on everything you’re doing, turn around and tell you that you should have known you were breaking decades old laws all along.”
Meanwhile, the digital token XRP has been in a terrible state in terms of price since the news broke out. At the time of filing this report, XRP has lost relatively 20% of its accumulated price based on 24 hours estimation. And it’s currently trading at $0.37 according to CoinMarketCap. With the look of things, there is a possibility for the digital token to keep losing value.