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US regulator charges Ripple over its XRP asset, saying it’s a $1.3 billion unregistered offering, not a cryptocurrency | Currency News | Financial and Business News

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Ripple’s logo appears at the SIBOS Banking and Finance Conference.

  • Blockchain company Ripple is operating an unregistered $1.3 billion offering, similar to an unauthorized stock sale, according to a complaint filed Tuesday by the U.S. Securities and Exchange Commission.
  • Stephanie Avakian, of the Securities and Exchange Commission, said that “issuers seeking IPO benefits, including access to retail investors, broad distribution and a secondary trading market, must comply with federal securities laws that require listing offerings unless the exemption applies. from the registry. Division Director in a statement.
  • “To be clear, this is all based on their unreasonable claim that XRP is, in their eyes, in some way the functional equivalent of a share of stock,” CEO Bradley Garlinghouse wrote in the Ripple blog.
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Blockchain company Ripple is operating an unregistered $1.3 billion offering, similar to an unauthorized stock sale, according to a complaint filed Tuesday by the U.S. Securities and Exchange Commission.

The lawsuit revolves around XRP, which was launched in 2013, which Ripple calls the cryptocurrency. The Securities and Exchange Commission says XRP is an “unregistered security offered to investors in the United States and around the world.”

Stephanie Avakian, of the Securities and Exchange Commission, said that “issuers seeking IPO benefits, including access to retail investors, broad distribution and a secondary trading market, must comply with federal securities laws that require listing offerings unless the exemption applies. from the registry. Division Director in a statement.

Tuesday’s lawsuit amounts to one of the most significant federal actions taken to convert unlicensed cryptocurrencies under the umbrella of traditional registered securities. As the crypto industry has exploded in the past decade, the Securities and Exchange Commission and other agencies have struggled to classify and regulate it. In a separate action, the US Treasury Department’s Financial Crimes Enforcement Network last week proposed new disclosure rules to improve monitoring of crypto wallets.

The value of XRP fell by about 22% early Wednesday, after completely erasing last month’s gains that had brought it to a two-year high.

The San Francisco firm, along with co-founder Christian Larsen and CEO Bradley Garlinghouse, are named in the lawsuit. The Securities and Exchange Commission said the executives have personally sold about $600 million in XRP.

The Securities and Exchange Commission said that Ripple violated federal securities laws by not registering XRP as a security, which requires greater disclosure, giving investors a more complete background because they value it.

Mark B. said: Department.

Garlinghouse said late Tuesday that the Securities and Exchange Commission has not given the company “clarity” on how to classify XPR’s offering — currency or securities.

“To be clear, this is all based on their unreasonable claim that XRP is, in their eyes, somehow the functional equivalent of a share of stock,” Garlinghouse wrote on Ripple’s blog.

Ripple started its campaign against the SEC lawsuit before it was filed. Garlinghouse had released the SEC on Twitter, saying in part that her chair, Jay Clayton, “has been taking notes from the Grinch this holiday season.”

The lawsuit comes just weeks before Clayton is set to leave his position on the Securities and Exchange Commission, as a new administration takes over Washington.

Two of Ripple’s lawyers said Tuesday that the SEC’s lawsuit was without merit.

Michael Kellogg, of Kellogg, Hansen, Todd, Figel & Frederick, said in a statement: “This complaint is wrong by law. Other major branches of the US government, including the Department of Justice and Treasury, have already decided That XRP is a currency. Therefore, transactions in XRP fall outside the purview of federal securities laws. This is not the first time that the US Securities and Exchange Commission has attempted to override its legal authority. The courts have corrected it before and will do so again.”

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