Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Nashville news?

Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Columbus news?

Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Dallas news?

Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

Ripple, one of the world’s most valuable cryptocurrency companies, on Monday disclosed that the SEC plans to sue the company, its CEO and its executive chairman for allegedly selling unlicensed securities. [Update: The lawsuit was filed Tuesday afternoon]

Why it matters: This could put a chill on some crypto industry investment, as Ripple has no interest in settling fast and moving on. It also could mildly complicate the upcoming IPO for Coinbase, where XRP-to-dollar activity made up 15% of trading volume over the past 30 days (per Nomics).

The basic backstory: Ripple in 2012 conjured a cryptocurrency called XRP, and has been gradually selling it off in scheduled allotments. This differs from the “mining” process used to create more traditionally-decentralized tokens like Bitcoin and Ether.

  • XRP’s current total value is around $22 billion, with Ripple still holding the majority of it in its treasury.
  • Ripple didn't register XRP as a security before selling it to third-party investors. Instead, it’s maintained that XRP is a virtual currency, in part relying on definitions contained in a 2015 settlement with the U.S. Justice Department (whose investigation was led by Katie Haun, now a partner with early Ripple investor Andreessen Horowitz).
  • The SEC has determined that several cryptocurrencies, including Bitcoin and Ethereum, are not securities. But it's also argued that certain cryptocurrencies are securities, and that others were securities at the time of initial sale and later morphed into virtual currencies. Those falling afoul of the SEC have included Kik/Kin and Telegram.
  • In this case, the SEC believes XRP was a security both at the time of sale and today, Ripple CEO Brad Garlinghouse tells me.

Garlinghouse says that the company has been in consistent talks with the SEC for years, but that he didn't know a lawsuit was imminent until yesterday.

  • He argues that outgoing SEC commissioner Jay Clayton is "picking winners" and seeking to codify a Bitcoin/Ether duopoly. "This is what an authoritarian government like China would do."
  • He also argues that Ripple's control over XRP is overstated, saying the company recently opposed two proposed developer changes and was outvoted.
  • When I asked if he has the stomach for a prolonged legal fight with the U.S. government, he laughingly replied: "How long have you known me?"

Crypto VCs are split on the significance of this pending suit beyond Ripple and the XRP ecosystem.

  • Some say they plan to take a breather until they have a better understanding of the SEC's argument, Ripple's defense and how both could apply to other cryptocurrency upstarts. They also want to see who Joe Biden picks to succeed Jay Clayton and watch how proposed Treasury Department rule-making plays out.
  • Others believe this is an issue specific to Ripple, which has long been a crypto industry lightning rod, and that the SEC's actions have little bearing on startup activity — particularly efforts building on top of Bitcoin or Ether.

The bottom line: Jay Clayton is dropping a bomb on his way out the door, and the crypto industry will be left to assess the damage.

  • Interested in more Axios crypto content? Please click here to be on our list if we launch something in the space.

Go deeper

Dan Primack, author of Pro Rata
Dec 22, 2020 - Economy & Business

SEC formally sues cryptocurrency company Ripple

Illustration: Sarah Grillo/Axios

U.S. securities regulators on Tuesday sued cryptocurrency giant Ripple, and both its CEO and executive chairman, for allegedly selling over $1.3 billion in unregistered securities. Ripple on Monday had publicly disclosed that the lawsuit was to be filed imminently, and said it does not believe its tokens needed to be registered.

Why it matters: XRP, the cryptocurrency created by Ripple in 2012, has the crypto industry's third-largest market cap at around $22 billion, behind only Bitcoin and Ether.

Updated 26 mins ago - World

17 U.S. and Canadian missionaries kidnapped in Haiti

Haitian soldiers guard the public prosecutor's office in Port-au-Prince this month. Photo: Richard Pierrin/AFP via Getty Images

American officials and authorities in Haiti are working to try and free 17 hostages from a U.S.-based missionary group who were kidnapped in Port-au-Prince over the weekend, AP reported Monday.

The latest: Christian Aid Ministries said in a statement Sunday, "The group of 16 U.S citizens and one Canadian citizen includes five men, seven women, and five children." The Ohio-based organization said they were on a trip to visit an orphanage when they were kidnapped Saturday.

China's economic growth slows

A worker assembles heavy truck engines in Hangzhou in eastern China's Zhejiang Province, on Monday. Photo: Long We/Costfoto/Barcroft Media via Getty Images

China's economy grew 4.9% in the third quarter of 2021 compared with a year earlier, the country's National Bureau of Statistics announced Monday.

Why it matters: The gross domestic product growth in the July-September period in the world’s second-largest economy marked the "weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter," Reuters notes.