In the earlier part of December last year, Ripple, a payments platform, came under the lens of legal scrutiny as the US Securities and Exchange Commission (The SEC) accused it of selling its native digital currency XRP worth $1.38 billion without following the registration procedure. This unlawful activity took place between 2013 and 2020. SEC claimed that lawyers had issued memos to the payment platform mentioning the standard procedure to avoid legal trouble, which Ripple chose to ignore.
News reports suggest that SEC and Ripple are now at loggerheads over the content of these memos. With Ripple presenting its view on the memo issued to it, it states that it has strong reason based on federal law not to consider its digital currency XRP as securities.
Ripple was charged with a Lawsuit by the SEC on the grounds of selling over $1.3 billion in unregistered securities. Now, Ripple accuses SEC of causing financial harm of $ 15,000,000,000 to its XRP users due to damages brought on by the lawsuit. According to the news report, Ripple claims that the lawsuit has created a reputation crisis around the payments network causing XRP to nosedive and negatively affecting investors.
Stuart Alderoty, General Counsel at Ripple, pointed out that despite the SEC alleging the sale of XRP to be illegal, it had full knowledge that Ripple’s asset was listed on hundreds of exchanges over the past decade. Alderoty also added that although major exchanges asked the SEC for information about XRP’s status, it never guided them.
Ripple has now decided to fight back the claims of SEC by stating that the SEC failed to disclose that XRP was to be viewed as a security, according to the law. However, according to the news report, this may prove to be a futile attempt to save the decelerating business, especially in the US market. In one such instance, MoneyGram, a money transfer platform, has reversed its association with Ripple. On the brighter side, only 5% of Ripple’s users are from the US. According to reports, Ripple was able to recover, as it witnessed its value touching $0.63 last month after it had crashed to $0.2 following the SEC lawsuit.
Brad Garlinghouse, CEO at Ripple, was reported stating that Ripple has acquired 15 new contracts with global banking institutions. Since the SEC brought its lawsuit, Garlinghouse said, adding that he believed the lack of clarity in the United States had been a “hindrance” to innovation. Ripple continues to grow its liquidity in the Asia Pacific region, especially Japan, where its Financial Services Agency clarified that it did not view XRp as security. Garlinghouse claimed that 95 percent of Ripple’s customers are from outside the U.S.