By Ross Macdonald
Ripple Labs Inc. based out of San Francisco has released a statement about the recent lawsuit which is being created from the SEC (U.S. Securities & Exchange Commission) which lists the complaint as follows:
“According to the SEC’s complaint, Ripple; Christian Larsen, the company’s co-founder, executive chairman of its board, and former CEO; and Bradley Garlinghouse, the company’s current CEO, raised capital to finance the company’s business.”
The statement from Ripple, can be read here:
In summary the statement reiterates how Ripple feels that the lawsuit is an attack on the “entire crypto industry” and that operation of the company will continue.
You can also read here, the press release from the SEC on December 22nd 2020 which details the action:
The total raise in question by the SEC, was in the amount of 1.3 Billion USD through an unregistered, ongoing digital asset securities offering of the cryptocurrency XRP.
XRP is the world fourth largest digital asset with 45 Billion tokens in circulation. The market cap and price has dropped significantly from approximately 60 cents to 20 cents per XRP, decimating the portfolios of those faithful to the brand and cryptocurrency.
One interesting fact going forward is that XRP since January 2018 has released a consistent supply of their digital asset every month from escrow to the public and institutions. One billion XRP has been made available every month, but often 70-100% of this was not bought and returned to the escrow account. Will this release continue during this time dealing with the SEC? It is hard to say, but the release of tokens may stop which would create scarcity in the token compared to it’s regular supply. No more than 30% of each monthly escrow release has ever been purchased which for example, 300 million XRP at a median price of 30 cents brings in a cool $9,000,000 USD per month in the peaks of escrow release.
For many in the blockchain industry, this is a polarizing time with lovers and haters of XRP clashing in crypto-twitter and other social platforms.
Here are the facts about the situation:
- Some exchanges have delisted XRP.
- Some exchanges have paused use of XRP.
- Most global exchanges are not effected from a legal standpoint.
- A date has yet to be assigned when the court case will occur.
Much has to be decided about the future of XRP in the lawsuit which can go in many directions. This will effect those who have XRP greatly and has surprisingly had collateral effects to the rest of the cryptocurrency markets.
Ripple Labs could have paid a fine or worked out a deal with the SEC, but rather, they have pushed ahead to fight the lawsuit in defence of future cases from the SEC against people, assets and businesses in the blockchain industry.
Many are tipping their hat to these efforts from Ripple, who clearly have the funds, and team to combat the SEC, which most companies would not be in such a position to do so.
Ripples board of directors includes Anja Manuel who is a lawyer who formerly has been on special committees before the US Congress, Department of Justice and the SEC which will make her a valuable asset for this legal case.