This massive cryptocurrency could be about to become effectively non-transferable

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• This massive cryptocurrency could be about to become effectively non-transferable

The United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, the company behind one of the world's largest cryptocurrencies, XRP. The regulator has filed a lawsuit against Ripple, along with CEO Brad Garlinghouse and Chairman Chris Larsen, alleging that the company violated federal securities law by selling XRP to individual investors. The case depends on the classification of XRP as a security (i.e. a financial asset from which the investor intends to benefit), as opposed to a currency or medium of exchange. By failing to file a securities registration statement or request a special exemption, Ripple violated several sections of the Securities Act of 1933, according to the official complaint. “During a multi-year unregistered securities offering, Ripple was able to raise at least €1.38 billion selling XRP without providing the type of financial and management information typically provided in registration statements and filings. periodic and subsequent streams,” the SEC wrote. The watchdog also accused the company of using funds generated from the sale of XRP to create artificial use cases that could be used to justify its classification as a currency, rather than value. “Ripple used this money to fund its operations without disclosing how it was doing it, or the full extent of its payments to others to assist it in its efforts to develop a 'use' of XRP and to maintain the trading markets on the side of XRP,” he added. the regulator.. Ripple is also said to have created an “information vacuum” that allowed Garlinghouse and Larsen to become the puppeteers of the market, only revealing certain information to potential investors.The announcement brought the price of XRP down to just €0.3 per unit, slashing more than a third of the cryptocurrency's market capitalization.

Will XRP be delisted?

Although only two US cryptocurrency exchanges (CrossTower and Beaxy) have so far delisted XRP, there are fears that a number of major exchanges will soon follow, making the cryptocurrency not effectively tradable in the United States. and making existing XRP stocks almost worthless. If the SEC is successful in its lawsuit, exchanges that continue to offer XRP to customers would have to register as exchanges or risk penalties. “Many cryptocurrency exchanges would be forced to pull it, so liquidity would dry up,” said Ryan Watkins, a research analyst at Messari, adding that the XRP price would “collapse hard” as a result. . According to John Willock, CEO of crypto services firm Tritum, "The asset will most likely be non-tradable to most exchanges and industry players." However, it should be noted that it is likely legal procedures are long and complicated, which means it is unlikely to be delisted en masse at this point. Ripple, for its part, argues that XRP should not be classified as a security. Garlinghouse himself described the lawsuit as “an attack on the entire US crypto industry and innovation.” In the company's Wells filing, a document that allows defendants to respond to any lawsuit brought against them, Ripple asserts that “the SEC's theory that XRP is an investment contract is factually incorrect, law and Actions ". “ignores the economic reality that XRP is, and has long been, a digital asset with a fully functional ecosystem and a real use case.” Via CoinDesk