After Ripple Labs and two of its executives responded to the SEC, the price of XRP rose 50%.
The SEC alleges that XRP is a security and that all three parties participated in the unlicensed sale of those securities
The price of XRP and acceptance of the platform has suffered considerably since the official charges were laid.
The last few months have been very difficult for the holders of the XRP asset. The price of cryptocurrency has fallen while other digital currencies have seen unmatched growth and prices in terms of market capitalization.
The fall in the price of XRP is due to charges brought against Ripple Labs and two of its executives in December. The SEC legal attack includes the sale of over $ 1 billion in unlicensed securities, based on their sales of XRP. The SEC claims that the XRP asset is actually a security, rather than a currency of exchange such as the two major cryptocurrencies, Bitcoin and Ether.
This announcement caused prices to drop by more than 50% as many platforms using RippleNet and XRP have suspended operations due to these statements. These platforms are not regulated by the SEC and want to remain so. As such, these statements could place them under the jurisdiction of the United States if they participate in the sale of securities to users. Even regulated firms like Grayscale, the largest digital asset manager in the cryptocurrency space, have reduced their XRP holdings in the wake of the announcement.
Ripple is fighting for his survival
Many players in the XRP ecosystem were extremely unhappy with these allegations. Some have filed petitions alongside lawsuits. Some were against the SEC for waiting seven years after the launch of XRP to act. Others have sued platforms like Coinbase for allowing the unregistered sale of securities.
Aside from all of the drama surrounding these accusations at the end of 2020, Ripple has legally responded to the accusations . In the file, they claimed the charges were based on „unprecedented and ill-conceived legal theory – without a mandate or authorization from Congress.“
Ripple says XRP is not a real cryptocurrency
Ripple Labs legal team states that XRP is not real cryptocurrency, but rather corporate share. They base this on the fact that “XRP performs a number of functions that are distinct from the functions of ’securities‘, as the law has understood for decades. For example, the token functions as a medium of exchange […] It is not a security and the SEC does not have the power to regulate it as such ”. Ripple Labs, Brad Garlinghouse, and Christian Larsen claim that since the token functions as a ‚currency‘ providing a means to store and transfer value, the SEC does not have jurisdiction over it as a corporate share. .
However, Ripple Labs and the other two defendants are said to have sold over $ 1 billion worth of XRP to fund their operations and for personal reasons. This has never been possible from a private “currency”. For now, XRP will remain in the background, but it will be very interesting to see how the SEC responds.
The crypto community, however, seems happy to see Ripple officially respond, if at least the price of XRP is any indication.