XRP spells suit
Feds cite Ripple over digital coin
The Securities and Exchange Commission sued cryptocurrency firm Ripple, claiming it violated investor-protection laws when it sold a bitcoin-like digital asset called XRP.
The San Francisco-based company said it’s prepared to go toe to toe with US regulators over XRP, which ranks behind Bitcoin and Ethereum as the world’s third-largest by market value.
The SEC charged Ripple CEO Brad Garlinghouse and co-founder Chris Larsen with engaging in an illegal securities offering. In its complaint, the SEC said the defendants had sold more than 14.6 billion XRP tokens since 2013 worth $1.38 billion in an unregistered offering.
Before the SEC filed its suit, Garlinghouse accused outgoing chairman Jay Clayton of “picking winners” in the cryptocurrency market on his way out the door.
“The SEC … should not be able to cherry-pick what innovation looks like (especially when their decision directly benefits China),” Garlinghouse said on Twitter late Monday. “Make no mistake, we are ready to fight and win – this battle is just beginning.”
“Jay Clayton is taking notes from the Grinch this holiday season, leaving the actual legal work to the next Administration,” he wrote in another post.
Ripple says XRP — which has a market capitalization of about $21 billion, according to Coinbase — is in fact a currency “and does not have to be registered as an investment contract.”
The SEC has reportedly ruled that Ripple rivals Bitcoin and Ethereum are not securities. But there are key differences between the cryptocoins — Bitcoin and Ethereum are issued gradually through a process called mining, while Larsen and other people created 100 billion units of XRP all at once in 2012, according to Fortune.