The U.S. Securities and Exchange Commission (SEC) has recently said to file a lawsuit against Ripple. SEC accuses Ripple of violating the investor-protection laws by selling XRP. It has been seen that this lawsuit is going to be one of the biggest actions that the SEC has taken against such high-profile crypto players. In the past few years, the SEC has filed many lawsuits against several firms and won the majority of them. However, Ripple is the biggest one among all those firms as it is having a valuation of $10 billion and as per the market capitalization, XRP is the third-largest crypto, after Bitcoin and Ethereum.
The U.S. SEC has not made any further comments regarding the lawsuit however, Ripple claimed that they have been informed by the commission. As the SEC accused Ripple of violating laws, Brad Garlinghouse, CEO of Ripple, and Chris Larsen, Co-founder of Ripple, has said that they are ready to fight the lawsuit in the federal civil court. The firm claims the SEC to be wrong in the matter of facts and law.
The lawsuit is filed to assure whether XRP is a security or not because the firm has not registered it with the SEC. The commission has not made it clear what they are seeking from this lawsuit. However, in this kind of lawsuit, the firms are entitled to financial penalties.
Even though XRP is quite similar to Bitcoin and other major cryptocurrencies, several key factors make it different. This is the reason, why the SEC is planning to file the lawsuit. They are aiming to find whether XRP is a security or not. According to Garlinghouse, there has been a huge regulatory unclarity when it comes to digital assets. He also questioned why after all these years the commission and its outgoing chairman Jay Clayton have decided to file a lawsuit against Ripple.