Cryptocurrency firm Ripple has been accused of making investments without proper licenses by the US Securities and Exchange Commission.
The SEC claimed that Ripple’s XRP token is a tradable asset, known as a security, and therefore subject to its regulations. The firm argues that XRP is a currency and therefore does not have to be registered as an investment contract. The value of XRP fell more than 30% on the news. Digital currencies are governed by another US regulator, the Commodity Futures Trading Commission (CFTC), which has different rules.
Ripple CEO Brad Garlinghouse and former CEO Chris Larsen have been charged with violating the Securities Act. We allege that Ripple and its executives failed over a period of years to comply with the fundamental investor protection provisions [of the SEC] and, as a result, investors lacked the information to which they were entitled,” said Marc Berger, deputy director of application of the control body. division.
Garlinghouse later blogged about the reaction of one of the firm’s attorneys, who said, “The SEC is completely wrong on the facts and the law and we are confident that we will ultimately prevail against a neutral investigator. XRP worth billions of dollars is traded every day, the lawyer continued, adding that it should be treated as a virtual currency like Bitcoin. Garlinghouse also emphasized that the cryptocurrency was separate from Ripple.
Later, he tweeted: “The SEC shouldn’t be able to choose precisely what innovation looks like. This battle is just the beginning. Ripple becomes the second most valuable cryptocurrency Cryptocurrencies continue to fall in Goldman reports Matthew Mellon: American billionaire dies in Mexico XRP, the world’s third-largest cryptocurrency, has behaved differently than others like Bitcoin and Ether, in part because it works differently.
It was created by Ripple, which developed a payment system used by banks to speed up and modernize the way they pay each other. And although Bitcoin is decentralized and “mined” via a sophisticated computer network spread across the world, Ripple controls XRP, and the company releases coins every month.