The case between Ripple and the US Securities and Exchange Commission is not a thing of today – it started way back in 2020. So if you have been around for a while in the crypto world, chances are that you might already know about it. However, as a beginner trader having an eye on Ripple, you should know about the Ripple lawsuit and how it can affect your investment before buying Ripple (XRP).
The who thing started on December 22, 2020, when SEC filed a lawsuit against Ripple Labs, the mother company behind the Ripple network, and its two executives. The commission claimed that Ripple Labs traded almost $1.3 billion in XRP without first registering the crypto asset with SEC. Of course, Ripple denied the allegation, and so the case is still in court. And this development has had a great effect on Ripple and its token XRP in recent years.
Why Was Ripple Sued In the First Place?
This is a good question and one that needs to be answered quickly so you can have a clear idea of what is really happening here. Ripple is presently facing a lawsuit stating that the company misled the investors when it sold XRP to them. SEC claimed that Ripple sold the XRP to the investors, telling them that there was only a limited amount of the coin for sale, hence creating a sense of FOMO (fear of missing out) in the mind of the investors. Whereas anyone could purchase XRP on any cryptocurrency exchange today after the initial sales, which made it look like Ripple intentionally tricked the investors to get their money.
Also, SEC sued Ripple Labs, claiming that the company did not register its XRP token as security before going ahead to sell it – a sales which generated more than $1.3 billion.
What Is SEC Saying About All of This?
Although the case is still in court, SEC has since held its ground that Ripple Labs has violated securities laws by selling XRP without being first registered with the commission. SEC is also saying the company might have violated some anti-fraud and anti-money laundering laws.
What Is Ripple Saying?
The whole thing would have gone down low if Ripple had agreed with SEC and settled things out with them from the beginning. But Ripple is insisting that the SEC has been biased in their judgment with how they classify digital currencies as securities. Perhaps Ripple is right on this, but if that is the case, that will mean a lot to this case and the reputation of the commission as a whole.
Also, Ripple believed that SEC might not be completely transparent because of its association with some other crypto platforms like Ethereum. They said Ethereum had done the same thing Ripple did in the past, and SEC did not do anything about it. But now that it’s happening to Ripple, SEC is refusing to give a pass. That is definitely something to suspect for Ripple.
Ripple also believed that since Ethereum and Ripple were initially financed by venture capital and not an ICO, the two crypto assets should be classified as non-securities and should not be subjected to securities regulations. If this can hold for Ethereum, then it should also hold for Ripple. At the same time, Ripple believed that the SEC was even acting against the securities law in the matter, especially when the commission admitted that there is no statement that could confirm whether XRP could be classified as security before filing the lawsuit.
So, Where Are We Now?
The case is still in court, and only the court can decide the fate of each of the bodies involved. However, the highlight so far is that there has not been any form of agreement between the two parties ever since. While SEC is claiming that Ripple has violated the securities regulation by selling XRP without first registering it as a security and also selling to investors without being completely truthful, Ripple is claiming that SEC has made a mistake with the whole thing.
Ripple said the commission is just being biased in its judgment, saying that what holds for one crypto asset should hold for all.
The Result of the Case Will Mean A Lot to Ripple Investors
Of course, this is a big junction in the journey of Ripple Labs and all Ripple investors. If Ripple wins the case, it will benefit the company greatly. It will cause Ripple’s acceptance to increase and hence affect its value and price tremendously. It could mean a big win for everyone.
On the other hand, if SEC wins, it could be the end of Ripple and a great loss to Ripple investors. At the same time, it will bring more stifled regulations against the crypto market in general. Many cryptocurrencies will now be subjected to SEC, and that will be violating the initial vision of cryptocurrency, which is being decentralized.
In the following months, we will hear more about the case and how things unfold between the two bodies. As crypto investors, all we can hope for is that Ripple wins the case. It will be a great gain for all!
