SEC sues cryptocurrency platform Ripple over alleged $1.3B fraud as other Exchanges distance themselves

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The US Securities and Exchange Commission on Tuesday filed a lawsuit towards the cryptocurrency platform Ripple, its CEO, and its chairman, for an alleged securities fraud price $1.3 billion.

The market watchdog accused the California-based Ripple of promoting unregistered securities to its retail clients since 2013. Through the sale of XRP in an unregistered securities providing, Ripple illegally raised $1.3 billion, in accordance with the grievance.

The failure to register the XRP gross sales — or qualify for a registration exemption — constitutes a violation of federal securities regulation, the SEC stated.

Ripple was additionally accused of receiving companies, together with labor and market-making, in alternate for the XRP providing. Ripple’s chairman, co-founder and former CEO Christian Larsen, and the corporate’s present CEO Bradley Garlinghouse, additionally orchestrated private unregistered gross sales price $600 million, SEC stated.

XRP, the digital token managed by Ripple, has been on free fall since SEC filed the lawsuit.

Several minor cryptocurrency exchanges, together with OSL, Beaxy and CrossTower, have both suspended or eliminated XRP from their platforms to keep away from authorized troubles. Traders and analysts now query the way forward for XRP, the world’s third largest cryptocurrency by worth.

“Given the uncertainty regarding XRP’s status, CrossTower has decided to delist XRP,” CrossTower President, Kristin Boggiano, stated in a press release.

OSL and Beaxy individually tweeted their suspension of XRP buying and selling, “until further notice.”

“Please note: In light of US Securities & Exchange Commission’s enforcement action against Ripple Labs & 2 of its executives, we have suspended all #XRP payment in and trading services on the OSL platform, effective immediately and until further notice”, OSL tweeted.

“The SEC has charged @Ripple with conducting an unregistered security sale. Due to this, #Beaxy has halted trading for XRP pending further news. $XRP withdrawals will remain enabled until further notice,” Beaxy Exchange tweeted.

Bitwise Asset Management stated in a statement it has liquidated its XRP place.

“I think it is the beginning of the end,” stated Frances Coppola, a monetary analyst and commentator who has publicly criticized the corporate and the XRP token prior to now. “Investors are already dumping XRP as quickly as they can.”

A spokesperson for Coinbase, one of many world’s largest exchanges with 40 million customers worldwide, stated it’s presently “considering [its] options” when requested for remark in regards to the lawsuit.

“Any exchange that allows trading in XRP is potentially breaking the law, so exchanges are bound to delist it,” Coppola stated, including the SEC has “a very well put together case,” though couching that “the wheels of the law grind very slowly, so XRP isn’t going to disappear yet.”

“This potential court case is deadly serious for XRP, possibly even lethal,” monetary writer and buying and selling veteran Glen Goodman, who has purchased and bought XRP “at various times in the past,” stated through electronic mail.

“The SEC doesn’t muck about—if it wants to make an example of Ripple as a warning shot to similar crypto companies, it will go all out to win this case, and XRP may have to be delisted from most crypto exchanges.”

MoneyGram, a cash switch firm, that obtained $50 million from Ripple in 2019 as a part of Ripple’s first funding, stated in a press release;

“MoneyGram has continued to utilize its other traditional FX trading counterparties throughout the term of the agreement with Ripple, and is not dependent on the Ripple platform to accomplish its FX trading needs,” MoneyGram specified.

“As a reminder, MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise.”

Although MoneyGram was not included within the lawsuit, SEC cited its relationship with Ripple within the grievance.

“The Money Transmitter became yet another conduit for Ripple’s unregistered XRP sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP ‘use’ and trading volume for XRP,” the SEC grievance famous.

In response to the SEC lawsuit, Ripple’s CEO Garlinghouse known as the case “an assault on crypto at large.” The SEC did not need to foster innovation within the digital asset area, Garlinghouse stated in a message to staff posted on the company’s blog.

“The SEC is fundamentally wrong as a matter of law and fact,” Garlinghouse instructed CNN. “The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration.”

Back in October, the CEO tweeted that the corporate would transfer its headquarters to a different nation if the regulatory view on cryptocurrencies within the United States would not get clarified.

“Although the SEC’s decision brings an even greater sense of urgency to our decision whether to move our HQ outside the US, we also look forward to working with the new Biden administration to see if we can find a rational path forward here,” Garlinghouse instructed Ripple staff.

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