Ripple’s XRP came under immense pressure, losing about 14% on reports that it would have to defend itself against a lawsuit from the Securities and Exchange Commission, which claims that it violated investor-protection laws when it sold a bitcoin-like crypto-asset popularly referred to as XRP.
READ: XRP drops 10%, biggest fall since December 4
What this means
At the time of writing this report, XRP traded at $0.486756 USD with a daily trading volume of $10,175,708,077. XRP has been down 13.67% for the day. It’s still the third most valuable crypto with a market value of $22,100,666,158.
- In a report credited to WSJ, the suit is still pending and is yet to be filed. Many crypto experts anticipate that this would be one of the highest-profiled SEC actions against a crypto brand.
- The U.S financial regulator over the years has brought, and mostly won, civil lawsuits alleging startups broke U.S securities laws when they raised funds by selling cryptos.
- None of the crypto firms sued by SEC, though, was as big as Ripple, which had a $10 billion valuation in its most recent funding.
READ: Anti-virus creator, John David McAfee charged for U.S tax evasion
A representative of the SEC wasn’t immediately available for comment.
Ripple revealed that it was informed by the U.S Securities and Exchange Commission yesterday that they had plans to sue the founders in a Federal civil court. Ripple and its top lieutenants further disclosed that they planned to fight such allegations.
READ: Ripple gains 12%, CTO owns at least a million XRP
“They’re wrong in a matter of law and fact,” Mr. Garlinghouse, CEO of Ripple, said.
Ripple has however significantly upgraded on how it manages XRP, relinquishing control of the future development of XRP over to independent developers. But it still holds about 6.4 billion XRP directly and has an additional 48 billion XRP held in an escrow from which it periodically sells to the public.
It has so far distributed 45 billion XRP since its debut. That is different from the ways in which bitcoin is created and distributed.
READ: Paris Saint-Germain Fan Crypto gains over 50% in a day