The Securities and Exchange Commission plans to sue Ripple in federal civil court for selling unregistered securities, according to a press release published online by the cryptocurrency company late Monday. Ripple defended its cryptocurrency, known as XRP, as a valid currency yet then drifted in conspiracy-laden language, saying that competing currencies like bitcoin and ethereum are “Chinese checked.”
The SEC’s upcoming lawsuit reportedly revolves around the Ask whether cryptocurrencies like Ripple’s XRP are primarily investment contracts that must be regulated by the federal government, or primarily currencies that can escape various rules surrounding financial disclosure to investors.
While bitcoin, the most famous blockchain based currency, was released in a decentralized way by a pseudonymous programmer, XRP was launched by Ripple Labs in 2012, and San Francisco-based Ripple is still the largest owner of XRP. It is the digital property the third largest cryptocurrency in the world after bitcoin and ether.
Brad Garlinghouse, Ripple’s CEO, defended the company in a series of tweets late Monday, arguing that outgoing SEC chairman Jay Clayton, was “picking winners and trying to limit US innovation in the crypto industry” by supporting only bitcoin and ether.
“The SEC – which is out of step with other G20 countries and the rest of the US government – should not be able to choose what innovation looks like (especially when their decision directly benefits China). Make no mistake, we are ready to fight and win – this fight has only just begun, ”Garlinghouse tweeted.
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Garlinghouse, who previously served as senior vice president at Yahoo and president of mobile communications at AOL in the 2000s and early 2010s, only hinted in his tweet something that was made much more explicit in the company’s press release, which is that China somehow controls bitcoin and ether.
“XRP consistently ranks in the top three virtual currencies by market cap – in addition to bitcoin and ether, the two China-controlled virtual currencies that are not securities according to the SEC,” Ripple said in a statement. defense of six pages posted online.
Ripple did not immediately respond to an email question early Tuesday about how bitcoin and ether could be controlled by the Chinese government. However, the SEC’s lawsuit has not yet been filed Reuters reports it could come this week.
The Wall Street Journal, who was the first to report the news, notes that while the SEC has been chasing after several digital currency traders in recent years, Ripple is the largest crypto company to attract unwanted attention from the FBI. Ripple had a valuation of $ 10 billion in 2019. Ripple co-founder Chris Larsen is likely to be personally named in the lawsuit, along with Garlinghouse, according to the WSJ.
Cryptocurrencies fell overnight on the news of the upcoming SEC action against Ripple, with bitcoin up over 5% and ether down more than 7%. XRP also declined late Monday and early Tuesday. Even without the SEC action, different investors have expected bitcoin to tumble after recently hitting an all-time high of more than $ 23,000.