SEC to sue Ripple with XRP in the crosshairs. According to Fortune, Ripple will be sued by the United States Security and Exchange Commission for allegedly selling unlicensed securities in the form of XRP tokens.
In a move reminiscent of Coinbase’s recent frontrunning of the New York Times exposing his alleged treatment of coloured workers, Ripple CEO Brad Garlinghouse took the unprecedented step of posting to Twitter to apparently legislate on the matter in the court of public opinion.
Despite class-action lawsuits and acrimonious splits between the original founders, Ripple has survived to become one of the fintech industry’s richest companies, with a reserve — primarily held in XRP — that could theoretically be worth almost $25 billion, even after a dramatic 13.5% drop in the price of the cryptocurrency token following the news of the potential lawsuit.
A source with connections to Ripple said “There’s no way it [XRP] is not a security.” Ripple posted a Wells submission document to its website explaining its position, claiming, “By alleging that Ripple’s distributions of XRP are investment contracts while maintaining that bitcoin and ether are not securities, the Commission is picking virtual currency winners and losers, destroying U.S.-based, consumer-friendly innovation in the process.”
The company continued to allege, without evidence, that Bitcoin and Ether are “two Chinese-controlled virtual currencies that the SEC has stated are not securities,” and that “innovation in the cryptocurrency industry will be fully ceded to China” should the potential lawsuit brought by the SEC be successful.
While Garlinghouse believed that Ripple will continue to prosper even with a security designation for XRP, the company has recently claimed that it is finding a new headquarters outside the United States, stating that a lack of regulatory clarification is pushing it to do so.