According to a report from the Wall Street Journal on December 21, the U.S. SEC will file a lawsuit against the cryptocurrency company Ripple Inc. because the cryptocurrency XRP it launched violates the investor protection law. Ripple Inc. said it will defend against a lawsuit brought by the Securities and Exchange Commission (Securities and Exchange Commission, referred to as sec).
The lawsuit has not been formally filed, and the current SEC chairman will leave after the Trump administration ends. In the past few years, the SEC has accused several startups of violating securities laws when raising funds through the sale of cryptocurrencies, filed civil lawsuits, and most of them have won. However, these companies are not as large as Ripple Inc.’s scale. In the latest round of financing in 2019, Ripple is valued at $10 billion, and XRP is the third largest cryptocurrency by market capitalization.
Ripple said the company received a notice from the SEC committee on Monday that the regulator plans to sue the company, CEO Brad Garlinghouse and co-founder Chris Larsen in federal civil court soon. But the company and executives said they plan to refute this claim.
“Judging from the law and the facts, they are wrong,” Garlinghous said.
The lawsuit revolved around whether the company’s digital asset XRP launched in 2012 should be registered with the SEC. Registration involves disclosing a company’s business model, risks and financial status to the SEC and the public. The US Securities and Exchange Commission reviews information disclosures and provides feedback to investors to improve information disclosures.
It is not clear what the SEC is seeking in litigation, but usually in similar cases, the SEC will require the sued company to pay a fine and require the digital asset sponsor to continuously disclose information to investors—just like a listed company regularly discloses The information is the same.
