One black swan event that is now placing massive pressure on XRP price is a lawsuit that Ripple has received from the SEC regarding XRP is unregistered security.
U.S Securities and Exchange Commission (SEC) announced on Dec.22 in federal district court in Manhattan that it has filed an action against Ripple Labs as well as its CEO, Brad Garlinghouse, and co-founder Christian Larsen.
The charges defendants with violating the registration provisions of the Securities Act of 1933, and seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties.
According to a lawsuit filed Tuesday, Ripple raised $1.3 billion over a seven-year period to retail investors through its sale of XRP on an ongoing basis.
Stephanie Avakian, Director of the SEC’s Enforcement Division. said: “Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies.
He added:
“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”
XRP dumps 20% on SEC Lawsuit Worries
At the press time, XRP is trading down just over 20% at its current price of $0.42. This is around where its price has been trading throughout the morning.
XRP chart 1 day | Source: Tradingview
Analytics firm Santiment explained in a recent tweet that social volume for XRP is rocketing higher, with discussions surrounding the crypto’s potential status as an unregistered security spreading like wildfire on social media.
“As news broke about Ripple expecting to be sued by the SEC, social volume for XRP understandably exploded for crypto’s #3 market cap asset. There has also been an increase in tokens being moved to exchanges, as prices have dropped -17% the past day.”
“The number of small $XRP addresses being created have not skipped a beat since yesterday’s #Ripple lawsuit announcement. However, the number of larger tier addresses are shrinking, with 18 less addresses with 10M+ tokens ($490k+) since the news broke,” Santiment tweeted.
Ripple currently holds $6.4 billion XRP directly. The payment firm also has 48 billion more XRP locked inside an escrow, which it periodically sells to the public.
Read more:
- U.S. Securities And Exchange Commission May Sue Ripple Over XRP Sales
- Is XRP Shitcoin? Will Ripple Escape A Lawsuit With The SEC When The Cryptocurrency Community Is Being Divided?