XRP Lawsuit Sinks Coin 22% As Garlinghouse Vows To Fight SEC

0

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
View all posts

An SEC lawsuit is currently sinking the price of XRP, which is down 22% at the time of writing. Are regulators comping for crypto now that Ripple labs has been targeted, and what will be the consequences?

Crypto had been warned that regulators would be coming for it. When Bitcoin started its upward trajectory at the end of the autumn, I remember reading a Forbes commentary that Bitcoin (and Ether) were probably already too big to be regulated, but that authorities would come for the others. The SEC confirmed earlier that Bitcoin and Ethereum are no securities, because they have their own utility.

Of course if one goes down further in the top 10 you are bound to end up with the other, somewhat smaller coins. Best known of those in the US is of course XRP from Ripple Labs, which was warned yesterday that the SEC is preparing a lawsuit in a civil court.

The New Tork Times, The Wall Street Journal, The Verge and the Financial Times all featured Ripple on the first page of their online business section.

Advertentie.

Project financing

During the Trump administration, the SEC has started cases against various startups, claiming they had all trampled securities laws when raising money by selling cryptocurrencies to finance their projects.

XRP is not really comparable to a startup. During its last funding round in 2019, the company of CEO Brad Garlinghouse was estimated to be worth $10 billion, and XRP itself is by now the fourth largest cryptocurrency on the block. Since the decline, XRP lost its third position to USDT.

3-man startup

At it’s current market valuation, the XRP coin is worth about $16 billion. The SEC charged Ripple, Christian Larsen and Bradley Garlinghouse with $1.3 billion for conducting an unregistered security offering.

Ripple CEO Brad Garlinghouse said in response to the Securities and Exchange Commission suit that the institution was wrong in matter of law and fact.

XRP is a currency, and does not have to be registered as an investment contract,” Garlinghouse continued. “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.

Second time

This is already the second time in a week that the US government seems to go up against the cryptocurrency industry.

A few days ago, we highlighted how Cardano founder Charles Hoskinson blasted the US Treasury Department for proposing a rule that would require banks and exchanges to verify the identity of so-called unhosted devices and software wallets that can exchange cryptocurrencies.

Stellar Lumens

Added problem is the possibility that the SEC could try and investigate the agreement that Ripple Labs has made with former CFO and current Stellar Lumens CEO JedMcCaleb. That man has access to a whopping 9 billion XRP coins which he received for his role in founding the Ripple Labs company in the first place.

Given that he can sell millions of XRP and decide when to counteract against a possible rise of the third biggest crypto, this could be seen as anti-competitive.

It sure looks like the authorities have understood the growing importance of the cryptosphere and are planning to go after it, as many predicted they would.