US FinTech Ripple announced on the 21st that it expects a lawsuit by the US Securities and Exchange Commission (SEC) over the crypto asset (virtual currency) “XRP” handled by the company. The US media reported. The SEC considers XRP to be securities and sues for investor protection violations under the Securities Act. Meanwhile, Ripple has argued against the SEC, saying XRP is a currency.
Controversy continued between the SEC and industry insiders as to whether to consider cryptocurrencies as securities. The SEC has stated that Bitcoin and Ethereum, which are typical virtual currencies, are not securities because their issuance is decentralized. On the other hand, the position of other virtual currencies was not clarified.
In the case of XRP, it may be considered as a security to which the securities law applies. If it is designated as a security, it is necessary to register for issuance with the SEC and carry out strict discovery procedures. On the other hand, if it is regarded as a currency, this is not necessary. Investors have filed multiple class action proceedings against Ripple over XRP.
“(SEC) Chairman Clayton is trying to limit innovation in the US cryptocurrency industry to Bitcoin and Ethereum,” Ripple’s CEO Brad Garlinghouse posted on Twitter yesterday. He expressed his intention to refute if the SEC filed a lawsuit.
Following the press, the price of XRP, which has the third highest market capitalization in cryptocurrencies, plummeted. According to research firm Coin Market Cap, it fell by 10% on the 22nd.
Ripple has partnered with several major companies, and SBI Holdings of Japan has also invested in the company.