1 minute read
- Ripple face legal action from the SEC.
- Ripple lawyers claim the SEC is completely wrong.
As we all know by now, the securities and exchange commission in the United States has filed a lawsuit against the San Francisco-based blockchain company Ripple. Not just the company though, two of its executives, Chris Larsen and Brad Garlinghouse (co-founder and CEO respectively) have been name-dropped in the lawsuit over claims that they have raised over $1.3 billion through an unregistered and ongoing digital asset securities offering in the form of its native token.
In the press release published by the securities commission on the 22nd of December this week, the claims stated that the company had raised funds beginning in 2013 to the sale of XRP in a non-registered securities offering to investors not just in the United States but on a global scale.
Furthermore, the company has allegedly been distributing billions of the tokens in exchange for non-cash consideration.
Stephanie Avakian, the director of the enforcement division at a commission has commented on the issue saying:
"Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies… 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."
In the wake of the lawsuit being revealed, the token fell 41% on the Binance platform. Many exchanges all over the industry have actually delisted the token. This is because, according to prominent lawyers & experts in crypto, if platforms list (or have already listed) the token during this time, they could be at risk if it is deemed as a security.
Ripple posted an article on the insights page on their website in response to the news. Their lawyers have said:
“The SEC is completely wrong on the facts and law and we are confident we will ultimately prevail before a neutral fact-finder. XRP, the third largest virtual currency with billions of dollars in trading every day, is a currency like the SEC has deemed Bitcoin and Ether, and is not an investment contract. This case bears no resemblance to the initial coin offering cases the SEC has previously brought and stretches the Howey standard beyond recognition.” Andrew Ceresney, Debevoise & Plimpton.
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