The government has filed a lawsuit against Ripple for allegedly violating the Investor Protection Act.
San Francisco, California-based Ripple, a cryptocurrency company, is facing a federal lawsuit from the Securities and Exchange Commission (SEC) for allegedly violating investor protection laws by using its digital token XRP of unregistered securities to investors benefits. XPR is the third most important cryptocurrency in the world after Bitcoin and Ether, and the suit could transform the industry significantly. Brad Garlinghouse, Ripple’s chief executive officer, announced that the SEC announcement includes Garlinghouse personally and one of the company’s founders, Chris Larsen, as a defendant.
XRP tokens were valued at around $ 22 billion as of December. However, unlike others, the tokens were created and distributed by the founders of Ripple, which could mean the company is breaking SEC regulations against the sale of unregistered securities.
SEC officials previously announced that Bitcoin and Ether were indeed legal cryptocurrencies due to their decentralized management. While XRP has grown exponentially in popularity and traded around the world, the fact that Ripple’s management owns a significant stake is controversial. The executives have stated that the profits will be held in reserves that will be sold over time. They claim to have no control over it.
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“It’s frankly absurd and not in fact grounded,” Garlinghouse said. “We are very confident in our position.” He added, Make no mistake, we are ready to fight and win – this fight is just beginning. “
Referring to Jay Clayton, a senior SEC official who was nearing the end of his term, he stated, “Clayton did this with one foot outside. It was rather shameful that he decided to sue Ripple and leave the legal work to the next chairman. I think we have to stand up for all of crypto – and not let the SEC harass the entire industry. We’ll be on the right side of the story. “
Garlinghouse also stated that the majority of Bitcoin and Ethereum were founded in China, while Ripple is an American company and should therefore be backed by federal officials.
“Not only is it Grinch-worthy, it’s shocking,” he said of the announcement that came around the holidays. “It’s an attack on the entire crypto industry and American innovation.” Ripple executives wanted to relocate the company’s headquarters outside of the United States a few months ago due to allegations of excessive regulation
The SEC had previously won a lawsuit against the messaging app Kik, which issued cryptocurrency tokens after the court ruled that the tokens were in fact unlicensed securities. Kik sold its tokens directly to investors during the 2017 “crypto bubble”, and there are many differences between the two cases. While Kik’s move was against SEC guidelines, no guidelines were available when Ripple began marketing its tokens.
Ripple Labs was founded in 2012 and named one of the 50 Smartest Companies of 2014 in the February 2014 issue of MIT Technology Review. Recently, the cryptocurrency has grown in popularity, and investors are jumping into the game in hopes of generating significant returns.
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