FinTech News
SEC Files Lawsuit Against Ripple
Despite all the negativity that 2020 had to offer, cryptocurrencies have actually enjoyed a fairly successful year all things considered. Case in point: Bitcoin is currently trading for more than $23,000 after finally breaking through the much-eyed $20k mark earlier this month. However, one token may be in for a dramatic end to 2020 (and start to 2021) as Ripple is now the target of a Securities and Exchange Commission lawsuit.
As Fortune reports, Ripple said on Monday that the SEC was planning to sue the company, alleging that the sale of the XRP token amounts to an unlicensed security. Sure enough, the agency filed the suit on Tuesday, December 22nd. The categorization of XRP as a security stands in contrast to other cryptocurrencies, such as Bitcoin and Ether, which the agency has determined are not securities because of their decentralized nature. However, given Ripple’s more prominent role in XRP, it seems that the SEC is viewing the token differently. The SEC declined Fortune’s request for comment or confirmation on the matter.
While the SEC has previously filed suit against other coins for similar reasons, Ripple is by far the most notable example. Currently, XRP is the third-largest cryptocurrency by market cap (behind only Bitcoin and Ether), currently totaling more than $22 billion.
In a Twitter thread that previewed the incoming suit, Ripple CEO Brad Garlinghouse wrote, “We know crypto and blockchain technologies aren’t going anywhere. Ripple has and will continue to use XRP because it is the best digital asset for payments – speed, cost, scalability and energy efficiency. It’s traded on 200+ exchanges globally and will continue to thrive.” He also vowed to defend his company against any impending suit, concluding, “Make no mistake, we are ready to fight and win – this battle is just beginning.”
The lawsuit against Ripple happens to be the latest in a string of regulatory issues facing FinTechs. Just last week, the popular stock-trading app Robinhood announced a settlement with the SEC that will see them pay $65 million after the agency accused the company of misleading customers in their disclosures between 2015 and 2018. Elsewhere, the Department of Justice has sought to block Visa’s proposed $5.3 billion acquisition of Plaid, saying that the purchase would allow the card company to “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.”
Ultimately, Ripple’s early announcement was surely meant to rally the crypto community as it looks to defend its technology and perhaps set a regulatory precedent. Although it may be a rough road ahead for the company, a successful appeal could also clear a path for future tokens. Either way, it will certainly be an interesting battle to watch as the crypto market continues to mature.
