In a surprise announcement, Ripple CEO, Brad Garlinghouse, has stated that the SEC is preparing to announce a lawsuit against the company. This lawsuit will be based on the SEC’s belief that XRP tokens should be classified as securities – as such, Ripple should be responsible for their unregistered issuance.
While this announcement isn’t overly surprising, the timing is. Not only have the involved parties decided to go down this path over the holiday season, but Ripple has taken the unconventional step in acknowledging the pending lawsuit, prior to its official announcement.
Furthermore, the timing is peculiar because it is occurring under the watch of SEC Chairman, Jay Clayton. With only weeks left on the job, Clayton is opting to kick-start what is sure to be a long and drawn out lawsuit. This means that the upcoming regime at the SEC will be responsible for these actions, whether it wants to be or not. Ripple executives liken this decision to a ‘parting shot’ by the current regime – one last attack on blockchain before leaving.
Speaking with Fortune, Garlinghouse stated, “Clayton did this with one foot out the door. Rather shamefully, he has decided to sue Ripple, and leave the legal work to the next chairman.”
No Fear of Ripple
While the SEC has shown a propensity for holding small ICOs accountable for illegal actions taken over the past few years, the regulatory body has shown no fear of larger outfits.
Ripple remains one of the largest and most influential company’s involved in blockchain to this day, and will represent the biggest fish in crypto targeted by the SEC to date. Other examples of the SEC taking on large cases include the resolved situation involving Telegram, in addition to a recent settlement with Robinhood.
This development involving the SEC is not the first time that Ripple has come under fire regarding the status of XRP tokens. Over the past few years, investors themselves have filed multiple lawsuits against the company, putting forth similar claims to what is expected of the SEC.
To get sued is never a good thing, and markets have responded accordingly over the past day with regards to the price of XRP tokens.
In addition to losing ground versus the USD, this price slump coincides with a continued resurgence among other top assets such as Bitcoin and Ethereum, resulting in an even greater relative drop. Despite these hard times, XRP remains the 3rd ranked token within the industry with a $21 billion marketcap at time of writing.
What should be interesting is if there were be an exodus of supporters from XRP. If so, where will they go? Will they remove themselves from crypto markets? Or will assets such as Bitcoin and Ethereum benefit, as they are clearly not securities?
Regardless of the outcome of this upcoming lawsuit, it may be the final push that sways Ripple to pack up and leave the United States.
In mid-2020, Ripple executives indicated that the company was contemplating a move outside of the country, as the regulatory landscape was simply undeveloped and unfriendly to blockchain based companies. While these claims were then retracted weeks later, these new developments are sure to reignite that fire, potentially resulting the Ripple saying its goodbyes.