The US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, a cryptocurrency platform, on December 22, 2020. Ripple has a Cryptocurrency, XRP, which is similar to Bitcoin. It ranks 3rd worldwide, after Bitcoin and Ethereum.
The news about the SEC filing a case against Ripple came as a shock to many, especially those who have invested in XRP. The lawsuit by the SEC is that Ripple sold unregistered tokens. Because of the allegations by the SEC, many investors sold the currency they had bought. It resulted in XRP’s value hitting rock bottom.
Over the next few weeks after the initial lawsuit, many cryptocurrency exchange platforms have delisted XRP from their platforms. Bitstamp announced that they would stop trading of XRP in January 2021. There’s no doubt about the fact that these actions by cryptocurrency exchange platforms and investors have negatively impacted Ripple and XRP.
What’s the Lawsuit About?
The SEC alleged that Ripple earned $1.3 Billion by selling XRP to retail consumers in the last 7 years. Investors were led to believe that XRP was a part of Ripple. In reality, XRP and Ripple are separate. XRP is a digital asset, similar to Bitcoin, and Ripple is just a fintech firm that created 100 Billion XRP tokens.
Losses Ripple & XRP Are Facing
During all this, Brad Garlinghouse, the CEO of Ripple Labs, has brought to light the losses that Ripple and XRP are facing. He claimed that XRP has lost over half of its market value since the SEC filed the lawsuit against the Fintech firm.
Ripple claims that SEC cannot sue XRP because it is a Cryptocurrency, which is outside their control. The SEC is going all in and asking the Court to contradict the findings of the firm and its peers in the UK, Singapore, and Japan.
Ripple’s Response To The Lawsuit
Ripple filed their initial legal response on January 29, 2021. Ripple claims that SEC cannot sue XRP because it is a Cryptocurrency, which is outside their control. The SEC is going all in and asking the Court to contradict the findings of the firm and its peers in the UK, Singapore, and Japan.
The Department of Justice and FinCEN determined on two occasions that XRP is a virtual currency. In the response, Ripple also claimed that SEC is trying to take bits and pieces from the firm’s quotes and manipulate their statements. They say that the conclusions made by the SEC are “unsupported by both the facts and the law”. There is a lot that cannot yet be determined until both the parties face each other in Court.
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