Why did Ripple crash 20% in just one day?

Cryptocurrency XRP (Ripple) collapsed on Tuesday by 20%, below $ 0.42 – after the head of the company Brad Garlinghouse announced the impending SEC attack on Ripple.

The US Securities and Exchange Commission (SEC) is preparing to file a lawsuit against the fintech company Ripple over an alleged unregistered sale of securities in the form of XRP tokens, writes Fortune, citing the firm’s CEO Brad Garlinghouse.

He criticized the SEC for the decision to file a lawsuit at a time when its chairman Jay Clayton is preparing to step down. Garlinghouse noted that the SEC is trying to “limit innovation in the US crypto industry to Bitcoin and Ethereum.”

“Clayton did it with one foot out the door. Unfortunately, he decided to sue Ripple and transfer the legal work to the next chairman, ”he told the publication.

The head of Ripple characterized the recent decision of the Ministry of Finance on the mandatory verification of users of cryptocurrency wallets and the planned SEC lawsuit against the company as “farewell shots” of officials of the Trump administration, critical of the industry. In his opinion, under the new President Biden, the industry will find more understanding from the government.

SEC officials have previously admitted that Bitcoin and Ethereum are not securities, primarily because there is no person or company to control them. In addition, they are released gradually through mining. XRP is different from them, as Larsen and others issued 100 billion XRP at once in 2012 through Ripple Labs and have sold them over the following years.

Ripple vehemently rejects claims that XRP is a security. Seeing XRP as a security is akin to equating oil with Exxon, Garlinghouse said.

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