After seven years, the U.S. Securities and Exchange Commission (SEC) officially charged Ripple and its executives, Chris Larsen and Brad Garlinghouse, for conducting a 1.3 Billion XRP Token Sale.
The lawsuit filed yesterday in New York, alleges that Ripple and its executives, violated the U.S. Securities Act’s registration provisions and continued to offer XRP to investors. Ripple’s response formally stated that they will contest the lawsuit.
However, the SEC complaint is unclear as to what is required from Ripple. For instance, what is a digital asset security and how is it an investment contract? Also, what does the SEC expect Ripple to do, pay a fine, concede to being a security, or to shut down the company?
What is clear is that the token stood at a market cap of $23 billion just yesterday. Now it’s at $13 billion as it falls below the support line of $0.35 per XRP. Despite the SEC running XRP nodes for a year and a half, they decided now to take action, instead of last year or even two years ago, when they were first considering whether cryptos were completely under their jurisdiction.
Due to the SEC’s eight year delay in filing the lawsuit, this current lawsuit brings into question SEC Chairman Jay Clayton’s actions. Clayton has stated his intention to resign at the end of 2020, although his term expires at the end of June 2021.
While the U.S. continues trying to develop a pathway forward regarding cryptocurrency regulation, making this decision at this time, has taken off billions from a globally traded and held asset. The SEC is a Federal institution, with the mandate of protecting investors rather than causing them harm. However, most XRP investors fail to comprehend this legal action as protection.
