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Why Should the Crypto Community Look at SEC’s Recent Action Against XRP?



Are you a cryptocurrency investor? Then you must keep up-to-date with the recent updates of the market. Recently, the third-largest cryptocurrency, Ripple, has been sued by the regulatory authority of the USA. As a result, the most popular crypto exchange Coinbase has decided to suspend the trading of XRP in its trading platform.

So, it’s essential for every crypto investor to know about it. It can help them to decide whether or not investors would hold Ripple in their portfolio.  In this article, you will know all about the lawsuit against Ripple, why it matters to the crypto community, and how an investor should treat it.

SEC’s Lawsuit Against Ripple

The governing body of the United States sued Ripple Labs Inc. for raising funds illegally by selling the crypto asset XRP. The complaint alleges that Ripple, one of its co-founders, and the CEO are involved in this activity. According to the complaint, the company was illegally selling the crypto asset XRP to retail investors.

According to the complaint by SEC:

  • Ripple raised more than $1.38 billion by selling the crypto asset XRP illegally to investors.
  • The company never filed any registration or provided any information stating about public investment.
  • Ripple has been involved in such illegal activities since 2013, even after getting legal advice that XRP will be treated as an investment contract.
  • Even after the advice, CEO Brad Garlinghouse and co-founder Larsen ignored it and sold XRP publicly without registration.
  • Although it’s nothing wrong from a financial perspective, it didn’t show any evidence and used the funds without disclosing any statements.
  • The lawsuit also alleges that the CEO Garlinghouse and co-founder Larsen made personal profits by selling the digital asset XRP unlawfully.
  • Defendants used their holdings for their own profits without showing any registration.

Ripple’s Response to the Complaint

CEO Brad Garlinghouse rejected the allegation stating that XRP is a currency and doesn’t need any investment contract. He said that the US SEC is trying to attack the whole crypto industry. It looks like Ripple will fight the case by using some of the funds raised from XRP.

Ripple has shown many early responses to the complaint to reject the allegations. The SEC has become serious about this particular case claiming that the CEO has made more than $700 million in profits.

Ripple has also raised an argument about the regulatory compliance of Ethereum and Bitcoin. The government is showing a friendly approach to these two cryptocurrencies. However, going against Bitcoin and Ethereum may not bring a better situation for XRP.

Impact of the Complaint

A crypto fund management company Bitwise has liquidated its holdings of XRP after the suit. Some of the minor crypto exchanges have also suspended trading of XRP, including OSL.

More importantly, a US-based popular crypto exchange Coiinbase has also announced that it will suspend XRP from its platform. Therefore, XRP is struggling in the crypto space, and it’s having liquidity problems. So, most of the investors are trying to sell-off their holdings.

The Long Term Impact

There are price volatility and liquidity problems for XRP in the short term, but what will be the long-term impacts. The businesses who are involved in XRP or Ripple may establish their business anywhere else, avoiding the US legal system. As a result, people will be more careful and will try to comply with the legal system to avoid such disputes in the future.

If you have invested in XRP, you might be facing a liquidity problem and might not be able to sell off your holdings. However, you need to take


Now, if you have invested in XRP, you should consider the above factors to know what to do with your holdings. In case you want to invest in Bitcoin, you can visit the app that allows you many great features. Lastly, please share your opinion and queries in the comments section below.

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