Why was the SEC complaint about Ripple not filed for seven years, maybe they didn’t provide the whole story
Continuing Ripple litigation story, this giant blockchain general counsel, Stu Alderoty, recently said that there is a single legal question at the heart of the allegations that the US Securities and Exchange Commission (SEC) filed a petition against the San Francisco payments company. And this is extremely important for the future of XRP.
Why has an SEC complaint about Ripple not been filed in seven years?
On 22 December, the SEC filed a complaint against Ripple for an unregistered securities offering, alleging that XRP was security rather than a currency.
Alderoty questions why the SEC complaint has not been filed in seven years. And it looks like the SEC hasn’t provided the full story.
“There are no ‘fraud’ or ‘misrepresentation’ claims. There is one legal question: Did certain of Ripple’s distributions of XRP constitute an investment contract? We look forward to litigating that in Court and providing the industry the clarity it deserves. As always, the SEC cherry-picked and truncated the facts, quotes, etc. Ex: no mention that throughout 2018, Ripple’s XRP sales represented only 0.095% to 0.43% of global XRP volume and in Q1 2019, those sales amounted to 0.22% of the overall trading volume.”
Ripple’s attorney also said the SEC’s complaint cuts other classifications made by the US government.
In 2015, the US Government concluded XRP was a virtual currency. Last I checked the SEC is still part of the US Government. Here’s the plus side – the industry will finally get the clarity it deserves. Goodbye “Howey test,” hello “Ripple test.” https://t.co/dk0M0sPlDN https://t.co/i2deXSY3HJ
— Stuart Alderoty (@s_alderoty) December 22, 2020
Both Alderoty and Ripple CEO Brad Garlinghouse have said that the world will soon hear the side of the company’s story.
An issue of securities in the US requires approval from the SEC. This caused the XRP price to drop from $ 0.56 on 21 December to around $ 0.28 on 24 December, a 50% drop. On 25 December, XRP traded around $ 0.33, a little above its recent lows.
Indian cryptocurrency exchanges expressed shock at the development.
Siddharth Menon, co-founder, and chief operating officer of WazirX, India’s largest crypto exchange by volumes, stated:
“Ripple is one of the most popular cryptocurrencies. It has also been among the top traded tokens on WazirX. SEC’s lawsuit against Ripple is shocking. Given the uncertainty of this situation, we will continue monitoring the lawsuit development and then take the necessary steps.”
Neeraj Khandelwal, the co-founder of crypto exchange CoinDCX, said:
“We are closely following the developments and waiting for more information on the matter before making a decision.”
Cryptocurrency professionals also distinguished XRP and other cryptocurrencies. Cryptos like Bitcoin and Ethereum can be mined by anyone. There is no issuer and owner. This was never the case with XRP. Ripple Labs owned 98% of it and issued a little bit every year. The company set the supply (100 billion XRP). This makes it more like a security than a cryptocurrency.
The lawsuit is also likely to influence regulators in other countries, including India.
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