- Ripple is preparing to contest the SEC lawsuit against the firm.
- The SEC is suing Ripple executives Chris Larsen and Brad Garlinghouse for the unauthorized sale of XRP tokens to raise $1.3 billion to finance the business.
- Several leading US crypto exchanges have already moved to limit or remove XRP trading.
Blockchain payments firm Ripple is pressing with its appeal to dismiss the case brought forth by the U.S. Securities and Exchange Commission (SEC) regarding the “unregistered $1.3 billion ongoing digital asset securities offering” referring to XRP.
In what is considered a legal milestone in the case, the crypto startup made a ‘solid motion’ to sidestep the fundamental question of ‘Is XRP a security?’ For the time being, it seems as there is no answer to the question that has spearheaded one of the biggest lawsuits in the crypto sector.
“No one’s finding out whether XRP is a security anytime soon, if ever, at least through this proceeding,” said Rebecca Rettig, a partner at FisherBroyles.
Although the evidence put forth by the Securities and Exchange Commission is strong, many view it as an overreaction to its attempt to regulate crypto assets as best as it can. For this reason, Ripple still has a huge chance of beating the suit.
Ripple has rejected claims that it conducted an “unregistered securities offering”, arguing that the regulator is trying to destroy America’s cryptocurrency industry, starting with XRP. And while the SEC lawsuit caused a sharp dip in the price of XRP, it seems it has done little to cool off investor interest in the cryptocurrency.
Since news of the case first broke out, XRP has come under heavy selling pressure as major crypto exchanges briefly suspended XRP trading. The suspension hit demand for the cryptocurrency, bringing its value to $0.211, XRP is 70 percent below its peak this year in November.
However, Ripple’s crypto has since doubled in value, recovering to $0.44295 as of the time of this article.
On the Flipside
- Blockchain payments firm Ripple has kept on adding new clients.
- Ripple has already been formally assessed by the Financial Crimes Enforcement Network (FinCEN) as a virtual currency.
- Many crypto exchanges are taking a “wait and see” approach to XRP and not suspending trading.
- XRP is also primarily traded outside of the US, especially in Asia where it is classified as a crypto asset.
The strong defence of Ripple’s lawyers alongside recovered investor interest in the cryptocurrency signal that the company may likely beat the suit. XRP holders are hopeful since the position of Chairman heading the Securities and Exchange Commission has been passed on to Gary Gensler, a former chair of the Commodities Futures Trading Commission. Gensler has been known to be very crypto-friendly while his predecessor was adamant on classifying cryptocurrencies as Ponzi schemes.
It is unclear whether XRP operations will remain inhibited due to the on-going lawsuit. Especially given that the majority of crypto exchanges are taking a “wait and see” approach to XRP for the time being. Several US trading platforms have confirmed said they have no plans to drop XRP at the moment, despite the SEC lawsuit. And Revolut, while cautioning its users that XRP “could drop to zero,” isn’t halting trading yet either, according to the Irish Times.
Other than a hefty penalty, it is unlikely that Ripple will incur any other consequences. In the UK and Japan, XRP has already acquired the title of crypto asset, therefore rendering its classification as a security invalid in those regions. XRP is also primarily traded outside of the US, especially in Asia.
The SEC has since come out with a statement, expressing their hopes that the outcome will “both set the goalposts for token offerings in the future and dispel longstanding uncertainty for the industry.”