The road to the main acceptance of cryptocurrencies will still have irregularities, and potential blockages set by the regulator. At the heart of it all could lie a lively existential nature – namely, between the companies that create and issue cryptocurrencies and the agencies that regulate them. And existential conversation and discussion are focused only on what crypto is and what is not.
The news arrived this week that the U.S. Securities and Exchange Commission has filed a lawsuit against Ripple over its XRP cryptocurrency. The SEC has accused Ripple of having an unregistered $ 1.3 billion offer of securities, and in the lawsuit it named CEO Brad Garlinghouse and co-founder Chris Larsen.
As reported by CNBC, the suit depends on the claim that crypto – the third largest measured in terms of market value before double-digit percentage slip in its value to 34 cents – is a security, not a currency, and is therefore regulated by the SEC.
“We state that Ripple, Larsen and Garlinghouse failed to register their current offerings and sales of billions of XRPs to small investors, depriving potential buyers of relevant XRP and Ripple business discoveries and other important long-standing protections that are fundamental to our robust the public market system, ”said Stephanie Avakian, director of the SEC’s Enforcement Division, in a statement reported by CNBC.
Ripple, for his part, said XRP is indeed a currency and should not be registered through the SEC for a bid.
Deepening his appeal, the SEC states that “From at least 2013 until today, [Ripple and the defendants] sold more than 14.6 billion units of a security called XRP, in return for cash or other fees worth more than $ 1.38 billion to fund Ripple’s business and enrich Larsen and Garlinghouse. Garlinghouse and Larsen, reportedly the SEC, sold without registration – but there is no exemption from that registration. Without that registration, investors do not receive “material information that hundreds of other publishers include in such statements each year when seeking public investment.” an “information vacuum” has been created.
Separately in the application, the SEC noted that the international law firm advised Ripple that XRP was unlikely to be considered a “currency” under the Exchange Act because, unlike “traditional currencies,” the central government did not support XRP and was not a legal tender. “By the way, the SEC stated that the sale of XRP did not record its sale for a particular“ use ”or“ currency. ”According to the SEC, XRP is an“ investment ”contract – related to trading volume and price action.
“There is no significant non-investment” use “for XRP, and Ripple has not sold XRP in a” use “offer,” the SEC said.
As noted in this space, while Ripple said he anticipates a lawsuit against the firm, Garlinghouse called the lawsuit “not only a Grinch valuable, it’s shocking” in an interview with Fortune. “It’s an attack on the entire crypto industry and American innovation.” There has been speculation about whether the company will relocate its business outside the U.S., in part because of the regulatory climate.
Ripple has its own document, which in response to the SEC declares that XRP is the currency.
“XRP is a currency, as determined by DOJ and FinCEN in 2015. Currencies are excluded from the legal definition of a security. Digital assets such as XRP that act as a medium of exchange, unit of account and / or store of value are properly categorized as currencies. The functional characteristics of XRP and its long-term usefulness as a substitute for fiat currency require that it be categorized as a currency and not as a security, ”said Ripple.
By the way, Ripple stated that “by claiming that Ripple’s XRP distributions are investment contracts and that Bitcoin and ether are not securities, [the SEC] chooses the winners and losers of virtual currency, destroying U.S.-based consumer innovation in the process. “Since XRP is traded between fiat and other virtual currencies on more than 200 world stock exchanges,“ the vast majority of which have nothing to do with Ripple, ”XRP cannot be considered an investment contract.
Get ready for 2021 to spend answering some existential questions about what crypto “is” – and what “what” is used for.