Grayscale Dissolving Its XRP Trust

  • The SEC sued Ripple Labs for selling XRP coins as security.
  • Various cryptocurrency exchanges delisted XRP from their platforms.
  • The world’s largest digital currency asset manager terminates its XRP Trust following the SEC lawsuit.

The world’s largest digital currency asset manager Grayscale Investments announced the start of its Grayscale XRP Trust dissolution process.

As the official statement released on January 13 says the move comes after the Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs last month arguing digital asset XRP to be a security under the United States law.

SEC lawsuit

The SEC filed a lawsuit against Ripple Labs, the company behind XRP, and against its executives Brad Garlinghouse and Chris Larsen for misleading XRP investors.

The company ran years-long coin offerings and sold $1.3 billion worth of XRP without registering with the regulators.

The SEC considers an XRP cryptocurrency as a security, meaning it is a tradable investment contract used to raise funds for a business or organizations. The regulator accused the Ripple Labs of sharing only partial information with the investors.

On the flip side

  • Ripple Labs rejected the charges, stating that XRP is a currency and does not need to be registered. In the long-term cancellations or differentiation between ICOs and tokens based on analog governance models are possible.

Domino effect

The lawsuit, filed in New York federal court on December 22, 2020, sent XRP price down in minutes. The coin which traded at $0.59 at that time lost half of its value in days.

The major cryptocurrency exchanges including Coinbase, Crypto.com, Bitstamp and Binance suspended XRP trading and delisted it from their platforms.

Grayscale’s moves

Following the SEC actions Grayscale removed XRP positions from its Digital Large Cap (DLC) Fund earlier this year. On January 5, 2021 the digital asset manager announced the XRP removal from the DLC Fund, which includes Bitcoin, Ethereum, and Litecoin.

The liquidation of its XRP Trust comes as a logical measure in response to the SEC lawsuit. As stated in an official press release, “it is likely to be increasingly difficult for U.S. investors, including the Trust, to convert XRP into U.S. dollars, and therefore continue the Trust’s operations.”

Grayscale will distribute the proceeds to its XRP Trust shareholders after excluding its fees and expenses.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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