The SEC, the federal agency responsible for regulating the stock exchange, is suing Ripple for violating regulations that prohibit the sale of unregistered securities. Under the agency's lens, the 1.3 billion dollars raised by fintech with XRP cryptocurrencies, in addition to the approximately 600 million dollars that CEO Brian Garlinghouse and co-founder Christian Larsen would have secured with the personal sale of the currency.
The SEC's move was announced earlier this week by the same board of Ripple, which in a statement issued late in the evening of Monday 21 December had commented with regret the intention of the entity: "it is a fundamentally wrong decision from a point of view legal".
More specifically, the issue revolves around the sale of the XRP cryptocurrency to investors, with the top management of the Californian company continuing to deny the need to register digital currencies as investment contracts. Meanwhile, the markets have already issued their verdict: the currency is plummeting and is now trading at $ 0.26, down 54.9% in the past week.
The SEC is suing Ripple for selling unregistered XRPs
Although there are only a few days left for the SEC's change of administration, the supervisory body has decided to proceed at a brisk pace in its lawsuit against Ripple: fintech will now have to defend itself against the multiple charges made by the agency.
The story is clear: the president of the agency, Jay Clayton, believes that Ripple should register the XRP virtual currency before listing it, as is the case with any stock that intends to make its debut on the financial markets. On the other hand, the board of the San Francisco-based company considers XRP a currency, and as such it should not be harnessed in canonical stock exchange regulations.
Moreover, the cryptocurrency was created by Ripple back in 2012, and in these eight years the supervisory body has never formally accused fintech of any irregularities. But the company's top management is shaking now: the SEC recently won high-profile lawsuits, such as those against start-ups Block.one and Kik, accused of circumventing the regulations with fundraising called Initial Coin Offerings (ICO).
If the outcome of the summons were to be the same, Ripple could undergo a substantial downsizing after consolidating its valuation at 10 billion dollars.
In fact, although the company has always declared itself independent from cryptocurrency, the strict rules that would be imposed on XRP in the event of a negative verdict would inevitably end up hitting the coffers of fintech, given that the latter has 55 of the 100 billion of XRP in its portfolio. currently present on the crypto market.
An escape route, as already mentioned in the past by CEO Brad Garlinghouse, could be guaranteed by the transfer of the headquarters outside the US border, although the Ripple board has repeatedly expressed its willingness to dialogue with the new Biden administration. On the list the United Kingdom, whose clear taxonomy is appreciated by the top of fintech, but also Switzerland, Singapore, Japan and the United Arab Emirates would be considered in the event of a move.
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