According to the report, the US Securities and Exchange Commission (SEC) declared today that it has challenged Ripple and its two executives, including CEO Brad Garlinghouse and CEO Brad Garlinghouse.
Co-founder Christian Larsen filed a lawsuit accusing them of raising more than $1.3 billion through an unregistered, ongoing digital asset securities offering. The SEC announced that Ripple is security and accused Ripple and two executives of raising funds in unregistered securities offerings by selling digital assets called XRP (Ripple) to the U.S. and global investors since 2013.
Billions of XRP were also distributed in replacement for non-cash considerations like labor and market maker services. According to the indictment, additionally, to organizing and promoting XRP sales used to finance the company’s business, Larsen and Garlinghouse also conducted unregistered personal sales of XRP, totaling approximately $600 million.
The indictment alleges that the defendants did not register their offer and sale of XRP, nor did they get any registration exemptions, violating the registration requirements of the Federal Securities Act.
Stephanie Avakian, director of the Enforcement Department of the SEC, stated that Ripple, Larsen, and Garlinghouse did not register their ongoing bids and sales of billions of XRP to retail investors, which prevented potential buyers from fully understanding XRP and Ripple’s business. Garlinghouse and Larson failed to register for XRP, which was an investment in Ripple, and ultimately only benefited both of them.
According to the regulations of the U.S. Securities and Exchange Commission (SEC), individuals and crypto companies must register their issued securities with the Securities Regulatory Commission, and if they are eligible for securities, they must be exempted. However, tokens are eligible for securities is still a highly controversial topic.
For a long time, the crypto industry has been waiting for clarification from the U.S. Securities and Exchange Commission (SEC) or new legislation on this subject. Ripple CEO Garlinghouse said that Ripple is a currency and does not need to be registered as an investment contract.
In fact, the U.S. Department of Justice and the Treasury Department have identified Ripple as a virtual currency in 2015, and other G20 (Group of 20) regulatory agencies have also done so. No other country classifies Ripple as security. And questioned its motives.
Kitaka Kitao, the board member of Ripple and CEO of SBI Holdings, stated that he is “optimistic that Ripple will win the final ruling.” Kitao said that Japanese financial regulators “have made it clear that XRP is not a security” and expects that US regulators will also reach the same verdict. But David Schwartz, the chief technology officer of Ripple, is not so optimistic.
Ripple has a market value of more than 20 billion U.S. dollars and is one of the most valuable digital cryptocurrencies in the world. It was created and distributed by the founder of Ripple in 2012 to promote fast cross-border payments.
The news came out, causing the price of XRP to fall sharply, which has fallen by more than 20% last week. As of press time, the price of Ripple is $0.41. According to Larson, earlier this year, Ripple was considering moving its business out of the United States due to growing dissatisfaction with regulation.
(Via)
