XRP price plummets as Ripple slammed by U.S. SEC over $1.3b in illegal sales ๐จ This article is 4 years old...
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XRP price plummets as Ripple slammed by U.S. SEC over $1.3b in illegal sales
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Updated: Dec. 23, 2020 at 2:15 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
XRP holders in Asia woke up to a red morning as the US Securities and Exchange Commission officially filed a charge sheetย against Ripple, one day after CEO Brad Garlinghouse leaked the news on social media.
SEC charges Ripple and two executives with conducting $1.3 billion unregistered securities offering https://t.co/3VP23RpSyV
— SEC_News (@SEC_News) December 22, 2020
The SEC, in its filing, said payments technology firm Ripple unlawfully sold over $1.3 billion worth of XRP tokens over the years, despite otherwise distancing itself from the cryptocurrency.
It added that โRipple was warned by lawyersโ that its tokens could be security (and thus required licensing), but the firm paid no heed and continued to build out its business in the following years.
The great XRP dump
Ripple, founded in 2012 in San Francisco, initially used XRP to fund (and expand) its business of building the framework of a decentralized, cross-border cryptocurrency. However, the firm has, since 2017, publicly stated it neither governs the XRP Ledger nor influence future XRP development.
But critics have pointed out Rippleโs dumping of millions of XRP on the market each quarter is not in line with the above. This has even brought together communities from rival blockchains together to speak out against Rippleโs action, in a rare instance.
In the wee hours today, the US SEC said Ripple executives had unlawfully sold billions worth of XRP to fund their business and their pockets, with the latter figure estimated at $600 million.
“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors,” said SEC director of enforcement Stephanie Avakian.
She added:
“[This] deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”
The lawsuit also found Ripple operated and controlled over 40% of the XRPLedger as a validator.
Inside the shady world of XRP trading
Ripple was also found using algorithmic traders to continuously dump XRP on the open market, apart from paying the token to exchanges in turn for a listing.
note that this is to the penny. pic.twitter.com/S7LZ8Tr7vB
— Palley (@stephendpalley) December 22, 2020
The lawsuit noted that Ripple awarded $150,000 to โtop three tradersโ of an unnamed exchange in 2017 who drove the most volume to the coin. This was considered by the company to help in building โmomentumโ for the token and raise its price higher.
The same exchange was later offered $1.1 million for a โQ3 listingโ for XRP, as per a mail. Such communications suggested that Ripple was actively leading the charge for listings, growth, and price spikes, which the SEC now holds co-founder Chris Larsen liable for.
Meanwhile, XRP fell over 22% as the lawsuit was made public. Industry observers expect XRP delistings to occur in the coming days as the lawsuit progresses.
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Theย XRP Ledgerย is a decentralized cryptographic ledger powered by a network of peer-to-peer servers.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Brad Garlinghouse stands at the forefront of financial technology as the CEO of Ripple.
