SEC Charges Ripple With Selling $1.3 Billion In Unregistered Securities, XRP Loses $2 Billion In Market Value

The Securities and Exchange Commission has charged cryptocurrency pioneer Ripple Labs, the firm that owns a majority of the world’s third-largest cryptocurrency, for allegedly raising $1.3 billion in an offering of unregistered “digital asset securities”–a huge sign U.S. regulators could ramp up oversight of the cryptocurrency space as the market surges to new highs.

According to the SEC’s complaint, Ripple, its cofounder Christian Larsen and CEO Bradley Garlinghouse raised capital to finance the firm’s business through an unregistered public offering of XRP tokens beginning in 2013.

The complaint, filed in Manhattan’s federal district court, also alleges that Larsen and Garlinghouse carried out personal unregistered sales of XRP totaling roughly $600 million.

As of 3 p.m. EST, the value of the XRP token had plunged roughly 12% over the last 24 hours, according to crypto data firm CoinMarketCap, wiping out more than $2 billion from the cryptocurrency’s market cap.

PROMOTED DP World BrandVoice | Paid Program Track And Trace Technology Is The Disruption Automotive Logistics Needs Grads of Life BrandVoice | Paid Program Driving Opportunity For Women Immigrants Is Key To Recovery Civic Nation BrandVoice | Paid Program My Path To Community College And Beyond

“It’s not just Grinch-worthy, it’s shocking,” Garlinghouse told Fortune when he warned of the impending lawsuit on Monday evening, later tweeting that Ripple, a San Francisco-based firm last valued at $10 billion in 2019, “is ready to fight” the suit. “It’s an attack on the entire crypto industry and American innovation.”

The SEC has largely cracked down on crowdfunded token sales, commonly referred to as initial coin offerings, but XRP is easily the largest cryptocurrency targeted by the SEC as a security; officials in 2018 declared ether and bitcoin were currencies and not securities because of their decentralized nature.

Crucial Quote

“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,” said Stephanie Avakian, director of the SEC’s enforcement division on Tuesday.

Big Number

$653 billion. That’s the current market value of all the cryptocurrencies across the world, more than tripling this year alone, according to CoinMarketCap. At its peak in January 2018, the market was valued at more than $800 billion. XRP’s current market cap of $21.6 billion is bested only by ether ($71 billion) and bitcoin ($435 billion).

Key Background

Heightened regulatory scrutiny from nations such as South Korea triggered a near-85% crash in cryptocurrency prices in 2018, but the United States has been slow to issue broad-based regulation. Among the most vocal U.S. regulatory agencies when it comes to cryptocurrency, the SEC spent months drafting guidance it released in April 2019 about when and how cryptocurrencies may be classified as securities, but it’s been relatively quiet on the front ever since.

The suit against Ripple, however, could mean that’s set to change as the cryptocurrency market soars toward new highs during the pandemic. “There is more and more interest from a wide spectrum of people, both inside the crypto space as well as inside the traditional financial institutions who are asking us for guidance,” an SEC Commissioner told CoinDesk in October. “I think we’re going to be forced to confront that more and more in the coming years.”

What To Watch For

Competition–from the government. Though it has not committed to the idea, the Federal Reserve is exploring the possibility of debuting its own central bank digital currency, Goldman Sachs said in a Sunday note. Officials have warmed up to the idea of a central bank token “largely out of concern that wide adoption of alternative digital currencies could endanger financial stability, U.S. financial intermediaries and the Fed’s ability to influence financial conditions,” Goldman analysts led by Jan Hatzius said.

Tangent

During the pandemic many investors have flocked to cryptocurrency–and namely bitcoin–as a hedge against longer-term inflation concerns, which have escalated in the face of increased government spending for coronavirus relief measures. In a report released Monday, digital asset management firm CoinShares said cumulative investments into cryptocurrency funds have totaled about $5 billion so far this year, eclipsing the approximately $1.4 billion plowed into the space through the end of last year.

Chief Critic

“Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency,” Ripple Counsel Michael Kellogg said in a statement to Forbes, arguing that the currency designation means XRP transactions fall outside the scope of federal securities laws. “This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again,” he added.

Further Reading

Ripple says it will be sued by the SEC, in what the company calls a parting shot at the crypto industry (Fortune)

Ripple’s Trillion-Dollar Man (Forbes)

As Bitcoin Surges 15%, Here’s What Wall Street’s Saying About The Cryptocurrency’s Meteoric Resurgence (Forbes)

U.S. Government Voids Public Comments On Newly Proposed Crypto Wallet Rule (Forbes) Follow me on Twitter. Send me a secure tip.

Jonathan Ponciano

 Jonathan Ponciano

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

.

.

CNBC Television

Ripple CEO Brad Garlinghouse addresses the Securities and Exchange Commission’s lawsuit over the XRP cryptocurrency.

“The Securities and Exchange Commission announced today that it has filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” SEC NEWS: https://www.sec.gov/news/press-releas… BITCOIN AND ALTCOIN LEVERAGE PLATFORMS: 💲 Phemex https://phemex.com/web/user/register?… 💲 Bybit https://www.bybit.com/app/register?re… 💲 Binance https://www.binance.com/en/futures/re… 💲 PrimeXBT https://u.primexbt.com/sunnydecree BUY BITCOIN AND ALTCOINS HERE: 🏦 Coinbase https://www.coinbase.com/join/5939812… 🏦 Kraken https://r.kraken.com/sunnydecree 🏦 Binance https://www.binance.com/en/register?r… MY CHART TOOLS: 📊 TradingView https://tradingview.go2cloud.org/aff_… MY HARDWARE WALLETS: 🔑 Ledger https://www.ledgerwallet.com/r/f7c4 🔑 Trezor https://shop.trezor.io/product/trezor… STORE YOUR PRIVATE KEYS SAFELY: 🔒 https://cryptosteel.com/product/crypt… FOLLOW ME: 📷 https://twitter.com/sunnydecree 📷 https://www.instagram.com/sunnydecree… 📷 https://discord.gg/Psrt8Yn 📷 https://www.youtube.com/sunnydecreede#Bitcoin#XRP#Ripple

Short-Term XRP Market Analysis: Must Hold Uptrend

As Bitcoin (BTC) faces a moment of some decision, XRP (XRP) too stands at a critical juncture for short to medium term trading. Namely, the notable altcoin must hold within consolidation patterns on *both* XRP/BTC and XRP/USD charts, and continue pushing toward a breakout scenario later in June – and it must do this despite what Bitcoin does.

XRP/BTC has been consolidating in a triangle pattern, after blowing through an important uptrend support level in April and bouncing of a lower support level in May. That bounce brought some impressive USD gains during May, 60% worth.

6 june xrp pa(source: TradingView.com)

This pattern should conclude about mid-month, if it holds, although it is not in itself a particularly bullish formation, and thus could break down at any time. Arguing for the weakness of XRP in this pattern, we notice that XRP/BTC has not retested the top of the pattern on this latest cycle.

6 june xrp pa(source: TradingView.com)

Looking at XRP/USD above, we note what strongly resembles an ascending triangle consolidation pattern – a bullish pattern. Although this uptrend has held, Bitcoin’s uncertainty could become a problem: any dramatic drop in Bitcoin’s price could easily knock XRP/USD out of this pattern, down to $0.35 or even $0.30.

As Bitcoin reaches the end of its own small consolidation pattern, a more dramatic move should come soon. After that, it may quickly become evident which way XRP is going to go. It is definitely possible that, even with a Bitcoin dump, XRP/BTC could have a leg up and keep the XRP/USD chart from falling out.

6 june xrp pa(source: TradingView.com)

As we can see on the above weekly chart, XRP has been one of the worst performing major altcoins of 2019. Maybe that will change soon.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

Source: CryptoGlobe

1,000,000,000 XRP: Ripple Unlocks $442 Million in Crypto From Escrow

Ripple has unlocked 1 billion XRP from escrow, worth about $442 million at time of publishing.

The San Francisco startup will sell a portion of the funds to crypto exchanges and institutional participants and return the rest to escrow at the end of the month.

Source: Bithomp

Ripple, which owns more than half of the total supply of XRP, does not reveal the buyers. However, crypto whale watchers are constantly monitoring XRP movements from Ripple’s over-the-counter (OTC) wallets to unknown wallets, which indicate sales of XRP.

Ripple typically sells a fraction of the total amount unlocked each month and releases an overview of the dollar amount of XRP sold each quarter.

According to the company’s last report, Ripple sold $169.42 million worth of XRP in January, February and March.

Source: Ripple

Since 2016, Ripple has sold a total of $890 million in XRP – 34.4% to crypto exchanges and 65.6% to institutions, reports The Block.

Ripple’s sale of XRP recently triggered a lively debate on Reddit on whether it has an impact on the price of the leading digital asset.

Source: Pivot – Blockchain Community

Ripple News: R3 Launches Corda Network — How Does This Impact XRP?

The long-awaited Corda Network (CN) has finally been launched by the enterprise blockchain software firm, R3. The Corda Network will be governed by a newly-created not-for-profit organization called the Corda Network Foundation. R3 announced the news in a press release on January 16, 2019, stating that the newly created foundation will take over the governance and work encouraging the growth and adoption of the Corda Network…….

Source: Ripple News: R3 Launches Corda Network — How Does This Impact XRP?