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Cryptocurrency company Ripple says SEC lawsuit is imminent

Illustration: Sarah Grillo/Axios

Crypto company Ripple announced on Monday that it's expecting a lawsuit from the U.S. Securities and Exchange Commission over its sale of XRP, the cryptocurrency it created.

Why it matters: If filed, it would be the highest-profile lawsuit of its kind. The SEC has sued a number of cryptocurrency companies in recent years over what it has deemed illegal sales of securities.

The big picture: Whether digital tokens — like XRP — are securities has been the central question regulators and the industry have been wrestling with in recent years.

  • SEC officials have declared Bitcoin and Ether to be currencies, as they are decentralized in their management, but have left the door open for others to qualify as securities, especially at the time of their issuance.
  • Yes, but: XRP is in a different situation. While it's widely traded, its originator, Ripple, is still very much involved and owns a significant portion of the currency (though it's held in reserves to be sold over time, which the company says it doesn't have control over).
  • XRP is currently the third most valuable cryptocurrency, with a market cap of about $22 billion.

What they're saying: "Make no mistake, we are ready to fight and win - this battle is just beginning," Ripple CEO Brad Garlinghouse tweeted with regards to the announcement, which was first reported by Fortune.

The bottom line: The potential lawsuit could have a significant impact in shaping the regulatory environment for digital tokens.

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.

Read the lawsuit (<1 min. read)Arrow
Axios
Updated 15 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: CDC director defends agency's response to pandemic — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden readies massive shifts in policy for his first days in office.
  3. Vaccine: Fauci: 100 million doses in 100 days is "absolutely" doable.
  4. Economy: Unemployment filings explode again.
  5. Tech: Kids' screen time sees a big increase.
  6. World: WHO team arrives in China to investigate pandemic origins.
Go deeper (1 min. read)Arrow
Dave Lawler, author of World
48 mins ago - World

Alexey Navalny detained after landing back in Moscow

Navalny during a march last February. Photo: Kirill Kudryavtsev/AFP via Getty

Russian opposition leader Alexey Navalny returned to Moscow on Sunday, five months after being poisoned with the nerve agent Novichok and despite being warned that he faced arrest upon his return.

The latest: Navalny was stopped at a customs checkpoint and led away alone by officers. He appeared to hug his wife goodbye, and his spokesman reports that his lawyer was not allowed to accompany him.

Go deeper (1 min. read)Arrow