SEC Sues Ripple over Selling XRP Crypto: $1.3 Billion Dollar Securities Fraud


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SEC Sues Ripple over Selling XRP Crypto:
$1.3 Billion Dollar Securities Fraud

On Tuesday The US Securities and Exchange Commission filed a lawsuit against cryptocurrency platform Ripple, its CEO, and its chairman, for orchestrating securities fraud worth $1.3 billion. According to the 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, used a raise capital to finance the company’s business. The SEC’s complaint filed in federal district court in Manhattan, charges defendants with violating the registration provisions of the Securities Act of 1933. Here’s why the SEC sues Ripple:

Complaint Allegations

Starting in 2013 the complaint alleges Ripple raised funds through the sale of digital assets known as XRP in an unregistered securities offering to investors throughout the world. The company Ripple allegedly distributed billions of the crypto-coin known as XRP in exchange for non cash compensation in the forms of labor and market making services. The complaint alleges the executives used personal unregistered sales of XRP totaling $600 million in order to finance the company’s business. The defendants did not register their offerings or sales to satisfy any exemptions from registration, in a violation of federal securities laws.

These requirements for registrations are setup to ensure that potential investors, both institutional and retail receive important information about the issuer’s business operations and financial conditions. The SEC alleges Ripple and its executives did not satisfy these investor protection requirements therefore key decision information was missing for people to make an informed decision on the offering.SEC sues ripple

Concluding Remarks

The crypto digital currency continues to expand albeit with hiccups and growing pains along the way. Rules and regulations are designed to protector investors in many cases. Ironically this lawsuit has plummeted the value of XRP and has hurt many holders by the very same governing body swearing to protect them. On the other hand individuals and institutions alike must play by the rules as we live in society bound by judicial norms, otherwise it would be a free for all anarchy society. The takeaway from this case illustrates how volatile the altcoin market can be. Not only are they subject to price fluctuations but regulatory ones as well. Do your homework and proceed with caution. For now I’d recommend Bitcoin and Ethereum for your crypto coin portfolio. You can take positions in riskier altcoins but do so with caution and due diligence.

ripple price

XRP Plunges over News

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