Cryptocurrency XRP Falls 25% After SEC Filed Lawsuit Towards Ripple
A visual representation of the digital cryptocurrency ripple is displayed in this photo illustration on January 30, 2018 in Paris, France.
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The price of XRP fell again on Wednesday after the US Securities and Exchange Commission filed a lawsuit alleging Ripple, a blockchain company with links to cryptocurrency, had an unregistered offering of 1, $ 3 billion carried out.
According to data from cryptocurrency market website CoinDesk, XRP fell by almost 25% to around 35 cents on Wednesday morning. The virtual currency even fell 17% on Tuesday after Ripple announced it would anticipate and fight legal action.
The SEC is suing Ripple and two of its executives, CEO Brad Garlinghouse and co-founder Chris Larsen. At the center of the federal agency’s complaint is the claim that XRP should be treated as collateral – like a stake in a company – and not as currency.
“We claim that Ripple, Larsen and Garlinghouse have failed to register their ongoing offering and sales of billions in XRP to retail investors, which provides prospective buyers with adequate information about XRP and Ripple’s business and other important long-term protections that are fundamental to our company , withheld. ” robust public market system, “said Stephanie Avakian, director of the SEC’s enforcement division.
Ripple denies this on the grounds that XRP is a currency and does not need to be registered as an investment contract. The company questioned the timing of the lawsuit – SEC chairman Jay Clayton is about to step down – and said the U.S. government and other regulators had previously granted XRP currency status.
XRP lost its place as the third most important cryptocurrency in the world. According to CoinMarketCap data, Tether – a dollar-pegged token that investors often use to trade crypto – surpassed its value on Wednesday.
The “security” label is important as it could put XRP under tough new rules and that would severely affect Ripple. Ripple owns 55 billion of the total of 100 billion existing XRP tokens and even generates income from the sale of some of its XRP holdings every quarter.
XRP was created and distributed in 2012 by the founders of Ripple and is designed to enable fast cross-border money transfers. The price of XRP has risen in parallel with Bitcoin and other cryptocurrencies this year, but is still about 90% down from its high in late 2017.
Ripple was last privately valued at $ 10 billion and is backed by companies like Japanese financial services giant SBI Holdings, Spanish bank Santander, and leading venture capital firms like Andreessen Horowitz, Lightspeed and Peter Thiels Gründerfonds.
Ripple had threatened to move its headquarters outside of the US due to a lack of regulatory clarity in the US, with London, Switzerland, Singapore, Japan and the United Arab Emirates cited as potential locations.