Drama around Ripple’s XRP: Ripple strikes back – are the ICO allegations baseless?
Ripple continuously denies that Ripple’s XRP is a security, claiming in a new response to an ongoing SEC complaint that it never conducted an ICO (Initial Coin Offering).
Ripple has said in a response to the U.S. Securities and Exchange Commission (SEC) dismissing the related lawsuit that it has never conducted an ICO.
Ripple fires back
Now that the seventh-largest cryptocurrency by market capitalisation has been embroiled in a lawsuit, doubts are being cast on Ripple’s XRP. However, Ripple is putting up a brave fight and denying all of the lawsuit’s allegations.
The primary complaint of the lawsuit is that Ripple violated the Bitcoin Loophole Securities Act of 1933 with its XRP token. Ripple’s defence is that XRP serves purposes that invalidate its classification as a security.
The filing cites the token’s function as a medium of exchange, and therefore the SEC has no authority to regulate it.
Ripple’s defence explicitly states that the issuance of XRP was not a sale of securities. It also states that classifying XRP as a security would „impair its primary utility“.
It would also mean that thousands of exchanges, market makers and other players would be subjected to complex legal processes.
The SEC filed the lawsuit in December 2020, alleging in it that Ripple unlawfully raised $1.3 billion through the offering. The lawsuit sent shockwaves through the crypto world and sent the price of Ripple’s XRP (to buy Ripple guide 2021) crashing.
Since then, however, the token has regained some of its value.
CEO Brad Garlinghouse also filed a motion to dismiss a lawsuit against him. In remarks tonally similar to the latest filing, the document states that the SEC has approved XRP for eight years. Hence, the sudden change is being questioned.
An attack on all fronts
Ripple also recently filed a lawsuit against YouTube for XRP giveaway scams that involved impersonating company representatives. Garlinghouse tweeted on 10 March about the development of the lawsuit.
According to him, new resolution would „prevent, expose and bring down these scams.“
„Last year @Ripple and I sued @YouTube for failing to enforce their own policies by allowing fake accounts (posing as my/Ripple’s verified accounts) to conduct XRP giveaway scams. We have now agreed to work together to prevent, detect and stop these scams.“
Retail investors have also filed lawsuits against Ripple. As with previous lawsuits, these often allege that Ripple failed to register XRP as a security.
All these developments put Ripple in a precarious position – even if business is good in Asia. Meanwhile, many investors are holding on to their XRP and waiting for a final verdict.
The consequences of a failed defence may or may not have global implications. It has been claimed that 95% of Ripple customers are outside the jurisdiction of the US.