The U.S. SEC (Securities and Exchange Commission) plans to sue Ripple for its ongoing sales of the XRP token. According to Fortune, the lawsuit will be listed shortly; however, no particular date has been assigned. Ripple co-founder Chris Larsen and Garlinghouse will be identified as defendants for the firm. Further, Crypto Twitter erupted with both support and exposition for Ripple’s non-decentralized business model.
However, following the lawsuit, Garlinghouse states that his firm will proceed to utilize XRP. He elucidates that Ripple is all set to fight and win. He further states that the battle is just initiating. Like other SEC lawsuits involving blockchain companies, this case raises concerns about whether Ripple’s XRP token is a security and if the token sales are a security offering. The XRP token likely constitutes security. It obviously satisfies the Howey Test description, which estimates securities to be any investment asset with profits that rely on promotion.
XRP investors earlier sued Ripple.Â
However, Ripple is already being sued by XRP investors in a supposed class-action lawsuit. It claims that the company stated XRP’s price would rise. The lawsuit, which began in 2018, maintains its way by the courts. The company has earlier spent $700,000 in fines on charges. The fine was due to a violation of FinCEN’s Bank Secrecy Act. It also spent an additional $450,000 in fines to the U.S. Attorney’s Office for the Northern District of California.
Moreover, this is not the first SEC securities suit against a crypto company. Various other major firms involving Block. one (EOS) and Sia have been accused by the SEC. These firms settled by paying a fine. Thus, they were not compelled to admit or decline the claims made by the SEC. Garlinghouse’s move on Monday indicates how messaging platform Kik declared the SEC would file suit upon it for raising $100 million to create Kin. In addition, Kik later resolved the case.
Ripple’s token sales are ongoing. As of mid-2019, Ripple had raised $1 billion through its continuous sales. The continuous sales could confuse matters, though even this is not certain. Though Ripple has earlier faced lawsuits encompassing its security status, those were class-action suits from private parties. This is the first time Ripple has been in trouble with the SEC on the issue. Notwithstanding, the outcome Ripple will apparently proceed to work. Moreover, even a negative result could be advantageous, as the decision would offer certainty for investors.
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