SEC desires to sue Ripple with XRP within the crosshairs
Fortune says Ripple is being sued by the SEC for allegedly selling unlicensed securities in the form of XRP tokens.
Brad Garlinghouse, CEO of Ripple, has taken the unusual step of posting on Twitter in what appears to be a court of public opinion to settle the issue.
Today the SEC decided to attack crypto. Chairman Jay Clayton picks the winners in his final act and seeks to limit US innovation in the crypto industry to BTC and ETH. (1/3) https://t.co/r9bgT9Pcuu
– Brad Garlinghouse (@bgarlinghouse) December 22, 2020
Bitcoin and Ethereum have evaded enforcement by the SEC due to their decentralized nature. However, XRP, the token associated with Ripple, has long been criticized as being highly centralized by some members of the crypto community. Ripple has an escrow account of around 50 billion XRP or around half of the total offer, which the CTO David Schwartz claims to have "gifted" from the makers of the third largest cryptocurrency.
Despite class actions and fierce divisions between the original founders, Ripple has grown into one of the richest companies in the fintech industry, with a reserve – held mostly in XRP – that is theoretically worth nearly $ 25 billion even at a dramatic 13.5%. Dollar could have cut the price of the cryptocurrency token after the news of the possible lawsuit.
A source with ties to Ripple told Cointelegraph:
"There's no way it (XRP) isn't security."
Ripple posted a Wells filing document on its website explaining its position, claiming, "By claiming that Ripple's XRP distributions are investment contracts and Bitcoin and Ether are not securities, the commission is selecting and destroying virtual currency winners and losers US consumer-friendly innovation in the process. "
The company continued to claim, without evidence, that Bitcoin and Ether are "two China-controlled virtual currencies that the SEC has stated are not securities" and that "innovations in the cryptocurrency industry will be completely ceded to China" if the potential Lawsuit filed by the SEC will be successful.
Fortune says both Garlinghouse and co-founder Chris Larsen, whose total assets are estimated at $ 13 billion, are likely to be named as defendants in the potential lawsuit.
Although Garlinghouse has stated that Ripple would continue to thrive even with a safety designation for XRP, the company has recently claimed it is looking for a new headquarters outside of the US, claiming that a lack of regulatory clarity is forcing its hand.
Cointelegraph reached out to Ripple to comment on whether Larsen and Garlinghouse would stay in the US amid the potential lawsuit and had received no response at the time of publication.