Threat of Ripple lawsuit: Ripple’s XRP plunges 17% – further losses possible
Ripple, the issuer of the XRP token, has been caught in the crosshairs of regulators over their alleged illegal distribution.
Ripple is facing a class action lawsuit from US authorities over its alleged involvement in the illegal issuance and distribution of XRP tokens, financial magazine WSJ reports.
CEO Brad Garlinghouse expressed his frustration in this regard on Twitter. He claims the US Securities and Exchange Commission (SEC) is ready to file charges against him and Bitcoin Profit Ripple co-founder Chris Larsen for allegedly selling „unlicensed securities“ to US citizens.
Today, the SEC voted to attack crypto. Chairman Jay Clayton – in his final act – is picking winners and trying to limit US innovation in the crypto industry to BTC and ETH. (1/3) https://t.co/r9bgT9Pcuu
– Brad Garlinghouse (@bgarlinghouse) December 22, 2020
According to Garlinghouse, Ripple, the company, has used XRP and will continue to use it because it is the best digital asset for payments.
„The SEC, out of step with other G20 countries and the rest of the US government, should not be able to cherry-pick what innovation looks like (especially when its decision directly benefits China).“
Garlinghouse commented that the regulation of Bitcoin and Ethereum in the US is unfair and directly benefits the mining industry in China – apart from the numerous entrepreneurs built on these protocols in that region.
However, this prevents other blockchains or US-based startups like Ripple from benefiting adequately from the technology, he argues.
Is Ripple’s XRP a security or not?
If filed, the lawsuit is expected to revive one of the longest-running questions in the cryptocurrency space: How much does Ripple profit from XRP, and for what purpose does it control the token?
As such, the San Francisco-based company has distanced itself from XRP in recent years, having originally launched and distributed the token in 2012. Regardless, Ripple continues to hold over 50 billion XRP to sell on the open market and fund business activities with the proceeds.
Garlinghouse and Larsen each also own a significant amount of Ripple’s XRP, with industry observers noting that such ownership is not considered fully „decentralised“, as financial publication Fortune comments.
Meanwhile, Ripples XRP crashed after the development became public. The token fell 10% to $0.46 in Asian trading as traders reacted to news of the lawsuit. However, the broader crypto market also plunged – Bitcoin by 3% and Ethereum by 4%.