Digital Assets: Clayton’s Parting Shot At Crypto – SEC To Sue Ripple

December 22, 2020 | Digital Assets, News, Regulations

Ripple, which is associated with XRP, said Monday it expects to be sued by the SEC.

The SEC will likely sue Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen, according to Fortune.

The SEC will charge the defendants for selling XRP tokens, which it alleges are unlicensed securities. XRP ranks third in the pecking order of cryptocurrencies with a market cap of $23 billion.

The SEC would make the case that XRP is a security and should have been registered as an investment contract prior to its sale.

SEC: XRP is a security

While bitcoin and ethereum are created by decentralized mining, Larsen and others created 100 billion XRPs in 2012 for Ripple Labs.

Ripple holds 55 billion XRPs in escrow but sells chunks of 1 billion of these currency reserves every month.

This escrow could be worth nearly $25 billion according to Coin Telegraph.

It is Ripple’s stand that XRP has, over the years, become decentralized by virtue of its use as a bridge currency in cross-border transactions. Further, it does not have discretionary power in the utilization of the escrowed XRPs.

Politically motivated

The suit against Ripple will launch at a time when Clayton and other senior SEC officials are about to leave the office.

“Clayton did this with one foot out the door,” alleged Garlinghouse to Fortune. “Rather shamefully, he has decided to sue Ripple, and leave the legal work to the next chairman.”

SEC’s allegation that Ripple violated U.S. laws by not registering the token with the SEC before listing it doesn’t cut much ice with Garlinghouse.

In an e-mailed statement by a Ripple spokesman, Garlinghouse said:

“The SEC is fundamentally wrong as a matter of law and fact. XRP is a currency and does not have to be registered as an investment contract. 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.”

Related Story:  Ripple Invests In Money Tap, A Subsidiary Of SBI Holdings, Japan                                                  

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
Digital Assets: Colonial Pipeline Caved; Paid $5M Ransom To Hackers
May 14, 2021     Digital Assets, News

Though initial reports said that Colonial Pipeline would not pay a ransom to the hackers that brought the nation’s largest fuel pipeline to a halt, Bloomberg reported Thursday that the…
Artificial Intelligence: A Molecule For Alzheimer’s Created By Exscientia’s AI Enters Clinical Trials

Oxford, UK-based Exscientia uses AI to design and create drug candidate molecules satisfying complex therapeutic requirements with revolutionary efficiency. Joint research by Exscientia with Sumitomo Dainippon Pharma Co., Ltd. (TYO:…
Venture Capital: Vinted, The Marketplace For Previously Owned Clothing, Raises $303M
May 13, 2021     News, Venture Capital

Vinted, a European startup that runs a marketplace for used clothing and home goods, announced its raise of $303 million at a valuation of $4.5 billion, post-money. That valuation is…
FinTech: German Regulator BaFin Hauls Up N26 On Money Laundering Lapses
May 13, 2021     FinTech, News

On Wednesday, Germany’s Federal Financial Supervisory Authority (BaFin) ordered challenger bank N26 to implement appropriate internal controls and safeguards and comply with general due diligence requirements to prevent money laundering…