Ripple bosses prepare for battle with SEC
Ripple chiefs Brad Garlinghouse and Chris Larsen are gearing up to battle the US Securities and Exchange Commission with a legal fight that may shape the way cryptocurrencies are regulated.
Beleaguered Ripple and its native XRP cryptocurrency have struggled under the weight of the SEC allegations after financial officers branded the organisation an unregistered security.
The cryptocurrency – highly popular in both the US and UK – had been on a steady upward curve until the allegations surfaced. Despite the effort of the company’s many followers – the XRP Army – prices have remained held back as investors approach with caution.
XRP had been looking strong at almost 70 cents a unit before the SEC made its feelings known on December 22 2020. Within 24 hours it had fallen below 25c. Currently, XRP is trading at around 45c following an impressive recent market lift back above the 60c mark.
As welcome as the comeback has been to XRP fans, many argue that the SEC action has crippled what was a remarkable upward curve that had been on track to challenge its own all-time-high of $3.92 and, more importantly, stunted its market capitalisation growth.
The SEC filed against Garlinghouse and Larsen to the US District Court of Southern New York, complaining that sales of $1.3 billion of XRP by Ripple and its executives from 2013 to 2020 constituted an ongoing unregistered offering of securities. The seven years were, according to the authority, a violation of Section 5 of the 1933 Securities Act.
Plain and simple
However, lawyers acting for Garlinghouse have now returned fire, penning a letter to Analisa Torres – a Federal Judge – that states the litigation represents “regulatory overreach, plain and simple” and that the Ripple CEO intends to dismiss the allegations.
The letter then goes on to list the reasons why Ripple’s lawyers believe the “SEC’s allegations fail for a number of reasons”.
The protest centres around the SEC accusation that the pair were able to manipulate the XRP market through their sales, and it questions the SEC’s ability to comprehend the economic realities of XRP sales.
The letter is a robust signal of intent that a legal battle is looming, and it throws the gauntlet down to the SEC which must now demonstrate evidence that shows Ripple’s bosses had committed violations that assisted the company financially.
Whatever the outcome, many experts will agree the case could shape the way cryptocurrencies are regulated in the future – on both sides of the Atlantic.
