Ripple Inc. said. unprotected itself against a lawsuit from the Securities and Exchange Commission that claims the company violated investor protection laws when it sold a bitcoin-like digital asset called XRP.
The suit, which has not yet been filed, would be one of the top CSS actions against the cryptocurrency pioneer, just as the governor’s chairman leaves at the end of the Trump administration. The SEC over the past few years has filed a civil lawsuit and most insist they are raising secure security laws when they raised money by being selling cryptocurrencies.
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None of these companies, however, were as big as Ripple and XRP. Ripple had a valuation of $ 10 billion in its most recent funding round in 2019, and XRP is the third largest cryptocurrency by market value.
A representative for the SEC was not immediately available for comment.
Ripple said the commission was told Monday that regulators plan to sue the company, CEO Brad Garlinghouse and co-founder Chris Larsen in federal civil court. The company and officials say they plan to fight the claims.
“They are wrong in law and truth,” Mr Garlinghouse said.
The lawsuit revolves around whether XRP, a digital asset launched by the company in 2012, is actually a security that should be registered with the SEC. Registration involves informing the SEC and the public about a company’s business model, risks and financial position. The SEC reviews the disclosures and provides feedback to improve them to investors.
It is not known what the CSS is seeking through its litigation, but in similar cases it has received financial penalties and a requirement on digital asset sponsors to provide ongoing disclosures to investors – just like the occasional publications of public companies.
XRP is similar to bitcoin and other cryptocurrencies, but also differs in key ways prompted by SEC scrutiny. Bitcoin was an open source software project launched by a pseudonymous creator himself named Satoshi Nakamoto.
XRP, originally called Ripple, was created, initially sold and backed by the company’s Ripple.
Ripple has dramatically changed its relationship with XRP, turning its developed control into an open source network of independent developers. But the company still holds around 6.4 billion XRP directly and has an additional 48 billion held in escrow from which they sell them to the public from time to time.
It has distributed 45 billion XRP since its inception. That’s different from the ways bitcoin is created and distributed.
The SEC has stated that bitcoin or ether, another well-known cryptocurrency, are not securities. But the agency has been around handing over a pass to other digital assets to go beyond federal scrutiny.
Mr Garlinghouse, who has been critical of what he says is a lack of regulatory clarity for many digital assets, questioned why the commission, and in particular the group’s chairman, Jay Clayton, now chose to stand. to make an XRP.
“That doesn’t make any sense to me,” he said. It’s a bit progressive. “
Mr Clayton has said he is leaving the SEC before the end of the year. He has mostly taken a skeptical view of cryptocurrencies, saying that many seem to fall into the legal definition of security.
This story was published from a wire group group with no text changes.