Cryptocurrency XRP (Ripple) fell 40% on Wednesday, below $ 0.26. Since the beginning of the week, the token has lost more than half of its value.
The US Securities and Exchange Commission (SEC) has formally indicted Ripple Labs Inc. and two of its executives in raising more than $ 1.3 billion through “an unregistered ongoing offering of securities in the form of digital assets.”
According to the lawsuit, co-founder of Ripple Chris Larsen and its CEO Brad Garlinghouse raised capital to finance the company’s business. Since 2013, Ripple has been selling XRP cryptocurrency, which is an unregistered security. Larsen and Garlinghouse are accused of unregistered sale of XRP in order to enrich themselves for a total of about $ 600 million, writes ttrcoin.
Pursuant to the lawsuit, the SEC is seeking an injunction, seizure of illegal income with interest pending a decision and imposition of civil fines.
According to experts, it could take several years to resolve the claim. The SEC’s victory in this case will significantly affect the ability to circulate XRP in the market, since most trading platforms are not licensed to work with securities.
“A lot of cryptocurrency exchanges will be forced to delist, so liquidity will run dry,” Messari analyst Ryan Watkins said, adding that the XRP price could plummet if this happens.
If exchanges continue to trade XRP after the hypothetical victory of the SEC, they may be required to register to work with securities under the threat of fines for allowing retail investors to access such instruments.
Asset management company Bitwise Asset Management announced the exclusion of the XRP token from its flagship Bitwise 10 Crypto Index Fund. Prior to the sale of the asset on December 22, XRP accounted for approximately 3.8% of the fund.
Brad Garlinghouse criticized the SEC decision, calling the actions of the American regulator “a terrible precedent for the entire industry and any company working with digital assets.” Ripple has always worked in partnership with regulators, he said, and stressed that there is no clear regulatory environment for the cryptocurrency industry in the US.
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