Brad Garlinghouse, CEO of Ripple.
John Chiala | CNBC
The Securities and Exchange Commission on Tuesday filed charges against Ripple, the fintech company best known for cryptocurrency XRP, and two of its executives, for alleged violations of investor protection laws.
The SEC alleged that Ripple, co-founder Christian Larsen and CEO Bradley Garlinghouse, raised more than $ 1.3 billion through an unregistered securities offering.
“We allege that Ripple, Larsen and Garlinghouse have failed to record their ongoing offer and sale of billions of XRP to retail investors, leaving potential buyers inadequate for adequate information about XRP and Ripple’s operations and other important long-term protections that are fundamental to our robust public market system. Stephanie Avakian, director of the SEC’s Enforcement Division, said in a press release.
Garlinghouse had expected a lawsuit to be filed before Christmas. In a statement late Monday, he said the SEC’s anticipated lawsuit was “fundamentally wrong, both in law and in fact,” and questioned its timing.
“XRP is a currency and does not need to be registered as an investment contract,” said Garlinghouse.
XRP was created and distributed by Ripple’s founders in 2012 and is designed to enable fast cross-border payments. The currency’s value against the US dollar has roughly doubled since the beginning of November, thanks to a peak in the latter part of that month, but is still down more than 80% from its late 2017 peak, while the rival Bitcoin cryptocurrency recently hit an all-time high.
The company was last privately valued at $ 10 billion and is backed by Japanese financial services firm SBI Holdings, Spanish bank Santander and top venture capital firms including Andreessen Horowitz, Lightspeed and Peter Thiel’s Founders Fund, among others.
Ripple is number 28 on this year’s CNBC Disruptor 50 list.
– CNBC’s Ryan Browne and Kate Rooney contributed to this report.
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