The third largest crypto asset by market capitalization, XRP, expanded its losses and fell to November lows after the US Securities and Exchange Commission filed an expected lawsuit against US-based large blockchain company Ripple and two of its executives.
Source: Adobe / Nasibli
At the time of writing (08:57 UTC), the worst performing coin among the top 40 crypto assets by market cap, XRP is trading at $ 0.36 and is up 22% in a day and 21% in a week sunk. The price fell 23% in one month and reduced its profits to less than 88% in the past 12 months.
XRP Price Chart:
Learn more: Small exchanges begin suspending XRP trading following SEC lawsuit
The SEC claims that Ripple, its co-founder, chairman Christian Larsen, and CEO Brad Garlinghouse raised over $ 1.3 billion through an unregistered, ongoing offering of digital asset securities.
“In addition to structuring and promoting the XRP sales that were used to fund the company’s business, Larsen and Garlinghouse also made in-person, unregistered sales of XRP totaling approximately $ 600 million,” the SEC said and added that in return, the company allegedly distributed billions of XRPs in exchange for pecuniary benefits such as labor and market-making services.
“We claim that Ripple, Larsen and Garlinghouse have failed to register their ongoing offering and sales of billions of XRP to retail investors, thereby allowing potential buyers to have adequate disclosures about XRP and Ripple’s business and other important long-term protections that we have are fundamentally deprived of robust public market systems, “Stephanie Avakian, director of the SEC’s Enforcement Division, is quoted in a press release.
The SEC is calling for injunctive relief, pre-trial interest levies, and civil penalties.
Meanwhile, Garlinghouse claimed in his letter to Ripple employees that XRP was not a security and “the best digital asset for payments”.
“In fact, we’ve been debating why XRP is a currency (and not a security) for nearly three years with the SEC, and yet we’ve never met with any clarity,” said the CEO.
“The SEC is completely wrong about facts and laws and we are confident that we will ultimately prevail over a neutral fact finder. XRP, the third largest virtual currency with daily trading in the billions, is what the SEC holds for Bitcoin and Ether and is not an investment contract. This case bears no resemblance to the initial coin offering cases previously submitted by the SEC and extends the Howey standard beyond recognition, ”said Andrew Ceresney, attorney at Debevoise & Plimpton, who represents Ripple.
Meanwhile, the CEO claimed that “unlike securities, XRP’s market value was not correlated with Ripple’s activities.”
“Instead, the price of XRP correlates with the movement of other virtual currencies,” said Garlinghouse.
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Read more about the lawsuit here.
(This article has been corrected (XRP dropped to a one-month low, not a two-month low) and updated at (09:02 UTC): new pricing data and additional comments were added.)