US Securities and Exchange Commission sues the founder for illegal sale of unregistered securities, insisting that “Ripple should be treated as securities, not currency”
▲ Ripple (XRP) price changes. Source CoinDesk
Ripple (XRP), the third largest market cap in the virtual currency market, plunged nearly 40% in one day. It is a post-storm after the Securities and Exchange Commission of the United States (SEC) recognized XRP as a security rather than a currency.
According to CoinDesk on the 23rd (local time), XRP is trading at $0.26, a 33.44% drop from the previous 24 hours as of 12:17 am on the day. Around 8 a.m., it plunged nearly 40%.
The day before, the SEC filed a suit against Ripple co-founders, Brad Garlinghaus and Christian Larsen, on charges of illegal sale of unregistered securities (fraud). Initially, Ripple designed XRP as a cross-border payment method, but the SEC judged it as securities, not currency, and took such measures. The SEC claimed that the two founders were at fault for mistaking investors by raising at least $1.4 billion (about 1.543.8 trillion won) without registering securities.
“We believe that Ripple, Larsen and Garlinghaus sold billions of dollars worth of XRP unregistered, depriving potential buyers of the opportunity to disclose and protect information,” said SEC Executive Chair Stephanie Abakian.
Elliot Stein, an analyst at Bloomberg Intelligence (BI), said, “There are more than $1 billion in transactions in the lawsuit on the 22nd, but some agreements are possible.” There is a risk to do it.”
The price of XRP generated by Ripple in 2012 peaked in 2017, but now it has fallen close to 90% at the time. Ripple has denied the allegations, saying that XRP is a currency and there is no reason to register it under an investment contract.
In the past, Ripple has caused conflict with the authorities, such as announcing that it will relocate its headquarters from the United States overseas due to lack of regulatory clarity. “Switzerland, the UK, and the UAE are potential destinations,” said the founder of Garlinghouse in an interview with Bloomberg News in October. “What they have in common is that they are clarifying what regulations on different assets including virtual currency I said.
Bloomberg said, “XRP crashed almost 40% on this day, evaporating the market value of about $10 billion,” said Bloomberg.