Author | Qin Xiaofeng
Editor | Hao Fangzhou
Produced | Odaily
Author | Qin Xiaofeng
Editor | Hao Fangzhou
At 9 a.m. Beijing time today, the official Twitter of the US Securities and Exchange Commission (SEC) stated that it has formally prosecuted the encryption company Ripple and its two executives - CEO Brad Garlinghouse and co-founder Chris Larsen - for "conducting $1.3 Billion Unregistered Securities Sale,” the case was formally accepted by the U.S. District Court in Manhattan, New York.
Ripple officially stated yesterday that it received the SEC prosecution notice on Monday this week and is preparing to actively respond to the lawsuit.
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December 22,wall street journal1. The SEC sued XRP: From the rhetoric to the courtDecember 22,
wall street journal
According to reports,
The US SEC plans to sue the encryption company Ripple and two executives, accusing it of violating investor protection laws by selling XRP.
The news was quickly acknowledged by Ripple. Ripple said the company received notice from the SEC on Monday that the regulator plans to sue the company, CEO Brad Garlinghouse and co-founder Chris Larsen in federal civil court soon.
Then, Brad Garlinghouse posted on the official website to boost employee morale. The article wrote that after reviewing the SEC's complaint today, Ripple is confident about the future and firmly believes that it is legally and historically correct.
“We have always said that there is a lack of transparency in the regulation of cryptocurrencies in the United States, and that the SEC has stood by for years. In fact, we have had discussions with the SEC about why XRP is a currency (rather than a security) For nearly three years, there has been no clear answer. However, we have explained that XRP is not a security." Brad Garlinghouse said.
Brad Garlinghouse also cited reasons why XRP is not a security:
XRP is not an "investment contract". XRP holders do not share in Ripple's profits or receive dividends, and have no voting rights or other corporate rights. Buyers receive nothing from XRP purchases other than the asset. In fact, the vast majority of XRP holders have nothing to do with Ripple.
Ripple (our company) has shareholders; if you want to invest in Ripple, instead of buying XRP, you should buy Ripple stock.
Unlike securities, XRP's market value is not tied to Ripple's activity. Instead, the price of XRP correlates to the movement of other virtual currencies.However, Ripple's tough response did not cause much waves, and the SEC prosecution proceeded as usual.
"This morning, the SEC official website officially announced the prosecution of Ripple and its two executives - CEO Brad Garlinghouse, co-founder Chris Larsen, accusing it of raising more than $1.3 billion through unregistered digital asset securities offerings, violating The registration provisions of the Securities Act of 1933 and seek injunctive relief, payment of fruits and civil penalties."The SEC said: Ripple began raising funds in 2013 by selling unregistered securities, known as the XRP digital asset, to U.S. and global investors."Ripple also distributed billions in XRP in exchange for non-cash considerations, such as labor and market-making services; in addition to organizing and promoting XRP sales used to fund the company's operations, Larsen and Garlinghouse also sold XRP to individual investors for a total of approximately $600 million.
An issuer seeking a public offering must register the offering under the federal securities laws, unless an applicable exemption from registration applies,
Stephanie Avakian, director of the SEC's Division of Enforcement, said,
We charged Ripple, Larsen, and Garlinghouse primarily because they failed to register their sale of billions of XRP to retail investors, which prevented potential buyers from fully understanding XRP and Ripple's business, and affected the public markets that we have focused on protecting order. "
Regarding the SEC's prosecution, Ripple's lawyer added today:
“This complaint is legally false. Other major branches of the U.S. government, including Justice and Treasury’s FinCen, have determined that XRP is currency. Therefore, transactions in XRP are outside the scope of federal securities laws. This is not For the first time, the SEC is attempting to exceed its statutory authority. The Court has corrected it before and will correct it again.” Attorneys Michael Kellogg, Kellogg, Hansen, Todd, Figel, and Frederick issued a joint statement.
At present, the U.S. District Court in Manhattan, New York has officially accepted the case, and Odaily will follow up and report on the relevant progress as soon as possible.
It’s worth noting that despite Ripple’s claims that XRP moves are only related to the crypto market. However, affected by the SEC prosecution, the price of XRP has plummeted in the past 48 hours, with the largest drop exceeding 41% at one point, leading the decline of the top 50 cryptocurrencies by market value.
secondary title2. Exchanges may delist XRP centrallyRipple is not the first crypto project to be targeted by the SEC.
past few years, including
Instant messaging software Kik Messenger
, anonymous social Telegram, etc. have been suspended and prosecuted by the SEC. The first ICO prosecution can even be traced back to September 2017, when the SEC sued Maksim Zaslavskiy and two companies under his name: Diamond Reserve Club World and REcoin Group Foundation.According to previous experience, there are two main results of encryption projects’ “struggle” with the SEC: one is to take the initiative to settle with the SEC, register the ICO, and pay various fines. The second is that the court judged that the project was indeed fraudulent and fined it; in many previous prosecutions, almost all ICO companies were fined in the end, and many company founders were even permanently banned from serving as executives of listed companies and engaging in securities work, such as KIK.XRPOnce the SEC dies, there is basically no chance of a miss, and this time Ripple may be in danger. Even if the case has not yet been pronounced, Ripple is also disadvantaged in the SEC lawsuit.
From the perspective of the encryption market, many exchanges may take the initiative to delist XRP tokens in consideration of US regulation.
This morning, two small exchanges, CrossTower and Beaxy, delisted XRP. At 16:00, OSL, the first institution to obtain a virtual asset license in Hong Kong, announced that it has suspended all
Payment and transaction services on the OSL platform until further notice.
U.S.-compliant exchanges such as Coinbase, Bitstamp, and Kraken are more likely to be delisted. In particular, Coinbase is currently seeking an IPO. Under the requirements of listing compliance, it is also expected to take the initiative to delist XRP.
From the perspective of traditional markets, Ripple's old partners may suspend cooperation.
Ripple previously promoted its blockchain cross-border payment network, attracting partners including Moneygram, American Express and a series of banks from various countries. Now under regulatory requirements, these partners may consider suspending cooperation. For example, Moneygram issued a document today saying, "Moneygram will continue to monitor the development of the situation. During the agreement with Ripple, Moneygram will continue to use other traditional foreign exchange counterparties."
The rain is coming, and now for Ripple, the best option may be to pay a fine to reduce further losses.
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3. Support or push against, there are many opinions
In response to Ripple's SEC prosecution, the encryption market has mixed reactions.
Under the official Twitter of the SEC, many investors complained about Ripple:
……
"XRP is not a security, it's the greatest digital asset ever, it's fast, it's sustainable, and it's good for the environment.""[SEC] is indeed in breach of your obligations by allowing investors, especially millions of retail investors, to continue to buy digital assets that you suspect are unregistered securities. You should actually be suing yourself, not Ripple.""I will definitely continue to buy XRP because it is a value investment."
Interestingly enough, Ripple's supporters seem to be retail investors as well as early Ripple investors. For example, Japanese financial giants who have invested in Ripple
Yoshitaka Kitao, President of SBI Holdings, said,“The Financial Services Agency of Japan has made it clear that XRP is not a security. I am optimistic that Ripple will prevail in the final ruling in the US. SBI Holdings remains a firm partner of Ripple and looks forward to co-expanding in Asia.”。
The KOLs in the encryption market are almost on the opposite side:
“It appears that the Ripple/XRP team is regressing to new levels of unfamiliarity. They claim that for public policy reasons, namely because Bitcoin and Ethereum are “controlled by the Chinese,” their shitcoins should not be called securities. "V God, the founder of Ethereum, also mocked。
“Today, the US government came to the conclusion that we have known for 8 years. XRP is a scam. Anyone who buys it is a complete fool, and it made a few founders trying to steal the retail business. said Eric Conner, co-founder of EthHub.
