Ripple VS SEC, What do you need to know?

Ripple is a payment settlement asset exchange and remittance system network that can process transactions around the world. It is a network developed to cater needs of the financial industry. XRP, now one of the top cryptocurrencies in India by market capitalisation, was tailored to work on the Ripple network. Furthermore, Ripple facilitates exchange of a variety of crypto coins on its platform the Bitcoin, ethereum, litecoin, etc., and even commodities like gold.

Despite its ambitions, Ripple is currently facing some legal issues with the Security and Exchange Commission (SEC). SEC is a U.S government agency formed to regulate the securities market efficiently and protect the interests of investors. It takes actions against the wrongdoers and overseas the security markets and firms to ensure investors are treated properly by all fair means.

On Dec 22, 2020, the Securities and Exchange Commission announced that it filed a case against Ripple labs and two of its employees (executives). The case stated that the XRP is an unregistered security and not a digital asset as asserted by the company. XRP’s price was drastically affected after the filing. But, you must be confused about why it will matter to you? As SEC has no jurisdiction in India. Still, all eyes are on this case as its result will decide the cryptos future across the globe.

Let us gather insights on the perspectives of SEC and Ripple on the case to know more.

SEC’s perspective explained

Like Securities and Exchange Board of India (SEBI), SEC was created with a three-part mission.

• Protect investors
• Promote fair, efficient, and orderly markets.
• Facilitate capital formation.

And, according to the SEC, XRP token which is available in crypto exchanges in India should not be classified as commodity but rather as a financial security. It simply means the trading should be done under the regulations of the SEC.

However, Christian Larsen Ripple’s co-founder and CEO Bradely Garlinghouse raised money through an unregistered public offering of XRP starting from 2013. The complaint also asserts that these two personally carried out sales of XRP tokens totalling roughly $600 million.

Now, let's come down to what Ripple said in its defense.

Ripple’s perspective explained

The SEC’s lawsuit is seeking billions of dollars from Ripple and its executives. But, the company affirms that not any of its investors were defrauded. In fact, it explains the XRP’s failure to get registered as a security, calling its sale on ‘investment contract’.

Further, Ripple explains that SEC’s theory ignores the reality of Xrp, what it is and how long it has been the same, that it is a digital asset. Also, the company points to SEC’s statement and claims that cryptocurrencies like Bitcoin are not securities.

The fight is still on and the SEC has the upper hand. But, here comes the most important question:

How will this impact crypto?

As stated earlier, there was a huge fall in the demand, prices, and market of XRP after the lawsuit. Today, the number of crypto exchanges offering XRP has decreased to avoid getting into the crossfire. However, XRP holders have no choice but to hold on to the crypto with hope as the market is down for XRP. However, it's still in the game and may come back with a bang. To continue having recent updates on this matter, many crypto trading platforms in India like WazirX has a tab for ongoing trends, news, and information regarding ripple and other cryptocurrencies. You can check from there to know what’s going on in the crypto world.

Rea Setia is an passionate writer. She loves to share business tips and her experience about industry.