The issuer of XRP tokens has come in the regulatory crosshairs for their alleged illegal distribution.
Lawsuit coming for Ripple
Ripple faces a class-action lawsuit from US authorities for its alleged involvement in the illegal issuance and distribution of XRP tokens, financial publication WSJ reported today.
CEO Brad Garlinghouse expressed his frustration in this regard on Twitter. He claimed the US SEC was poised to file charges against himself and Ripple co-founder Chris Larsen for the alleged sales of “unlicensed securities” to US citizens.
Today, the SEC voted to attack crypto. Chairman Jay Clayton – in his final act – is picking winners and trying to limit US innovation in the crypto industry to BTC and ETH. (1/3) https://t.co/r9bgT9Pcuu
— Brad Garlinghouse (@bgarlinghouse) December 22, 2020
Garlinghouse added that Ripple, the company, has and will continue to use XRP because it was the best digital asset for payments, citing its speed, cost, scalability, and energy efficiency as benefits.
He further said:
“The SEC, out of step with other G20 countries & the rest of the US govt, should not be able to cherry-pick what innovation looks like (especially when their decision directly benefits China).”
Garlinghouse further noted that the regulation of Bitcoin and Ethereum in the US unfairly and directly benefits the mining industry in China, apart from the scores of entrepreneurs building on those protocols in that region.
However, this prevented other blockchains or US-based startups, such as Ripple, to adequately benefit from the technology, in his view.
XRP a security or not?
In case the lawsuit is filed, it shall revive one of the longest-running questions in the cryptocurrency space: How much does Ripple benefit from XRP, and to what end does it control the token?
As such, the San Francisco-based company has distanced itself from XRP in the past few years after initially launching and distributing the token back in 2012. Regardless, Ripple continues to hold over 50 billion XRP to sell on the open market and fund its business activities.
Seems like a good time to bump this classic from the blog.
For the last time, Ripple Labs created XRP. https://t.co/DCP17OuYeg
— Preston Byrne (@prestonjbyrne) December 22, 2020
Garlinghouse and Larsen also each own a significant amount of XRP, with industry observers stating such a holding does not qualify as wholly “decentralized,” noted financial publication Fortune.
Meanwhile, XRP took a knock as the development came out. The token fell 10% to $0.46 in the Asian trading session as traders reacted to news of the lawsuit. However, the broader crypto market tumbled as well, with Bitcoin falling 3% and Ethereum by 4%.