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Ripple sued by the SEC for its token XRP

Photo of: Joseph Stone
by Joseph Stone

Ripple announced that the American Stock Exchange Constable is about to take them to court. The SEC would accuse the company of selling the securities without a license in the form of XRP tokens.

Ripple is receiving both praise and criticism this week after it was mentioned earlier in the WEF report. Even threats. Indeed, its CEO Brad Garlinghouse announces that the stock exchange regulator (SEC) chose to attack the crypto company.

The reason for this future lawsuit is reminiscent of previous SEC complaints against issuers of tokens or cryptocurrencies. Thus, the SEC would consider the XRP as a security.

The authority thus accused Ripple and its executives of being guilty of selling securities without a license. According to Fortune, however, the SEC refuses for the time being to confirm the opening of proceedings against Ripple and the XRP.

The disagreement between the regulator and the American firm on the nature of the token has been simmering for several years. For its creator, it resembles a currency and not at all a security, like a share.

The XRP is today the third largest cryptocurrency in terms of capitalization at $23 billion. Would Bitcoin and Ethereum have received special treatment from the SEC? The two crypto-actives are not securities according to the SEC.

However, Bitcoin and Ethereum have their decentralized nature. XRP is different. Ripple holds almost half of the outstanding Token, or 48 billion Token. This capital resides in an escrow account.

According to its CEO, this SEC decision, when the US administration will change in a few weeks, is “an attack on the entire crypto industry”. For Brad Garlinghouse, it is even a threat to “American innovation”.

Ripple has been denying for years any security status regarding XRP. The company points out that it does not have free access to the reserve fund. In addition, the token has become more decentralized. XRP allows third parties, such as MoneyGram, to make international transfers.

Therefore, Garlinghouse denounces, to consider the XRP as a security under Ripple’s control would be tantamount to the SEC considering oil as a security of the oil tanker Exxon. The regulator would apparently make another analysis.