Ripple says it faces SEC lawsuit as cryptocurrency XRP drops

XRP, the world’s third- largest cryptocurrency, slumped after Ripple Labs Inc. said it faces a U.S. Securities and Exchange Commission lawsuit over its affiliated token. The U.S. regulator has “inexplicably decided to sue Ripple,” the firm’s Chief Executive Officer Brad Garlinghouse said in an emailed statement. He didn’t specify the exact nature of the lawsuit but asserted XRP is a currency and “does not have to be registered as an investment contract” -- a reference to the longstanding debate over whether XRP is a security and subject to regulatory disclosures.

“The SEC has permitted XRP to function as a currency for over eight years,” he said. Ripple will challenge the suit in the courts “to get clear rules of the road for the entire industry in the U.S.,” he added.

XRP fell as much as 13%, touching the lowest level in about a week. The token has a market value of about $21 billion.