U.S. Securities and Exchange Commission has accused Ripple’s top executives of misleading investors and raising more than 1 billion without registering XRP with SEC as a security first.
SEC press release posted this news yesterday, on 22nd of December. Here is what they are saying: “Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies,” said Stephanie Avakian, Director of the SEC’s Enforcement Division. “We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.” You can see the whole press release here.
Ripple will challenge the suit in the courts which will be a great even for the whole cryptocurrency market, however, If in the end XRP is deemed as security it might render the 3rd largest cryptocurrency useless. This has already had a disastrous effect on XRP price, which has dropped more than 30% just in the last 24 hours.
Billions of dollars might be leaving XRP and investors will be looking into new opportunities such as Bitcoin and Ethereum. If you’d like to invest in the top 2 cryptos (BTC, ETH) you can use the eToro banner below, just click and follow instructions.