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The lawsuit is centered around XRP. The SEC described XRP as an unregistered securities offered to investors not only in the United States but also across the globe.
Coinbase is reportedly contemplating its relationship with Ripple as the Security and Exchange Commission (SEC) looks to stamp out XRP. Ripple’s native token, XRP, has seen its value slashed into two within the last 24 hours and faces a run down the slope following the lawsuit filed against it by the SEC. The value of the fourth biggest cryptocurrency by value has since fallen by almost 22% just a month after it’s value saw a two-year high.
The US Securities and Exchange Commision in their efforts to stamp out XRP, filed a complaint on December 22, accusing Ripple, a Blockchain company and parent company of XRP of running a $1.3 billion unregistered offering similar to that of an unlicensed stock sale.
A spokesperson for the US-based online cryptocurrency platform Coinbase stated that the company is currently “considering its options” as they geared up for the lawsuit against Ripple and XRP. Coinbase is one of the largest cryptocurrency exchanges in the US and across the globe, with over 40 million users on its platform.
The lawsuit is centered around XRP, a token controlled by its San Francisco-based company, Ripple which was launched as a cryptocurrency in 2013. The SEC however described XRP as an unregistered securities offering to investors not only in the United States but also across the globe. Chris Larsen, co-founder of Ripple and its current CEO Brad Garlinghouse were included in the suit with the SEC claiming they personally sold about $600 million in XRP.
The SEC’s decision to stamp out XRP came after they uncovered that its parent Ripple failed to register XRP as a security, violating federal securities laws which would require far more disclosure, thus giving investors a greater idea on its background as they value it.
Stephanie Avakian, the SEC Enforcement Division director, in a statement said that, Issuers looking to enjoy the benefits of a public offering which includes access to a secondary trading market, retail investors alongside a broad distribution must comply with the federal securities laws that require registration of offerings unless an “exemption from registration applies.”
Relatively smaller online cryptocurrency exchanges including CrossTower, OSL and Beaxy have since either temporarily suspended XRP trading activities or have entirely removed them from their platform. Bitwise Asset Management also announced on December 22 that they had liquidated its XRP position. In a statement from the firm, they stated that before the December 22 sale of the asset, XRP made up approximately 3.8% of the Fund. The firm added that the “fund liquidated its position and has reinvested the proceeds in other portfolio assets.”
CEO Brad Garlinghouse has claimed that the SEC is wrong for trying to stamp out XRP. Garlinghouse stated that Ripple’s mission doesn’t stop and that the SEC is entirely wrong on the facts and the law. He has vowed to fight the lawsuit claiming they will be victorious before a “neutral fact-finder.