The SEC officially filed the $1.3 billion lawsuit against XRP’s creator, Ripple for holding an unregistered security sale. The SEC also filed charges against the CEO of Ripple Brad Garlinghouse and Christian Larsen, the co-founder so let’s read more in today’s Ripple news.
The lawsuit filed today in a Manhattan court alleged that ripple raised $1.3 billion in an unregistered securities offering since 2013. Security is basically an investment contract so if the creators of a cryptocurrency advertise it as an investment to the US buyers, the SEC considers the coin to be a security under the US law as the SEC said in their press release as the SEC officially filed the lawsuit:
“The defendants failed to register their offers and sales of XRP or satisfy any exemption from registration, in violation of the registration provisions of the federal securities laws.”
SEC charges Ripple and two executives with conducting $1.3 billion unregistered securities offering https://t.co/3VP23RpSyV
— SEC_News (@SEC_News) December 22, 2020
The Securities and Exchange Commission alleged that ripple’s period sale of the 48.8 billion coins that it holds in an escrow account, constitutes a sale of unregistered securities but Ripple said that they sell XRP to increase the liquidity and to strengthen the health of the markets. XRP is the third-biggest crypto by market cap of $20.7 billion. The SEC suit said that Garlinghouse and Larsen helped to promote the XRP sales and to also “effect personal unregistered sales of XRP totaling approximately $600 million.”
The SEC sued a few crypto companies for hosting the unregistered securities sale among which was Block.one that managed to raise $4 billion in order to create the EOS blockchain and Telegram which the past summer had to return about $1.7 billion to investors that it raised in an ICO for the Telegram Open Network. These companies also settled with the SEC. Brad Garlinghouse already said that he awaited the lawsuit as he mentioned in the Wall Street Journal. The charges comprised “an attack on the entire crypto industry and American innovation.” XRP’s price crashed after the CEO announced the lawsuit so over the past 24hours the price dropped by 10.48% to $0.46 After the SEC announced the price dropped by two cents to $0.46.
As reported yesterday, Brad Garlinghouse said that Ripple is preparing to fight the lawsuit because he believes he has to stand up for all of crypto and not let the SEC bully the entire industry.
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