According to the CNBC report, XRP’s price plunged after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit alleging that Ripple, a blockchain company with ties to the cryptocurrency, conducted a $1.3 billion unregistered securities offering. XRP sank nearly 25% to around 35 cents today. The third-largest cryptocurrency by market capitalization fell as much as 17% on Tuesday after Ripple said it anticipated and would fight the legal action.
US SEC is suing Ripple and its executives for allegedly selling unregistered securities.
The U.S. Securities Exchange Commission is suing the blockchain firm Ripple and two of its executives, CEO Brad Garlinghouse and co-founder Chris Larsen. At the heart of the federal agency’s complaint is the claim that XRP should be treated as a security rather than a currency. This is not the first time Ripple is facing this dilemma, and it has been a long going debate in the crypto community whether XRP should be treated as a security or not. Stephanie Avakian, director of the SEC’s Enforcement Division, said that they allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors.
Ripple plans to fight the lawsuit.
Ripple CEO Brad Garlinghouse had said that they plan to fight the lawsuit in a series of Tweets earlier. The CECO noted that the SEC – out of step with other G20 countries & the rest of the U.S. govt – should not be able to cherry-pick what innovation looks like (especially when their decision directly benefits China). “We are ready to fight and win – this battle is just beginning,” he tweeted a day before SEC announced the lawsuit. The blockchain firm has maintained an escrow account of around 50 billion XRP, or around half of the total supply, which the CTO David Schwartz claims to have been ‘gifted’ by the creators of the third-largest cryptocurrency.