- The SEC plans to sue Ripple on the grounds that XRP is a security.
- Other blockchain firms have faced similar lawsuits and settled quickly, so this may not harm Ripple.
- Ripple nevertheless intends to fight the lawsuit.
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The U.S. Securities and Exchange Commission (SEC) is reportedly preparing to sue Ripple over its ongoing sales of the XRP token.
CEO Says Ripple Will Fight Back
On Twitter, Ripple CEO Brad Garlinghouse explained the situation.
“Today, the SEC voted to attack crypto,” he wrote. “Chairman Jay Clayton, in his final act, is picking winners,” Garlinghouse said, referring to the fact that Clayton will leave his position by the end of the year. He added that the SEC chair is “trying to limit US innovation in the crypto industry to [Bitcoin] and [Ethereum]. ”
Despite the emerging lawsuit, Garlinghouse says his firm will continue to use XRP. He adds that Ripple is “ready to fight and win,” and concludes that the “battle is just beginning.”
Beyond that, details of the lawsuit are uncertain. Ripple has not released an official statement. Rather, Garlinghouse has confirmed the details to Fortune, one of the first sites to report the news. The SEC, meanwhile, has not confirmed that it plans to file the suit.
Is XRP a Security?
Like most other SEC lawsuits involving blockchain companies, this case involves the question of whether Ripple’s XRP token is a security, and whether sales of the token are a security offering.
It is likely that the XRP token does constitute a security. It seemingly meets the definition of the Howey Test, which considers securities to be any investment asset with profits that depend on promotion.
Furthermore, this is not the first SEC securities lawsuit against a crypto company. Several other major firms, including Block.one (EOS) and Sia, have been sued by the SEC. Those companies merely settled and paid a fine, and were not forced to admit to or deny the claims made by the…