- Ripple, which is one of the world’s best-known financial technology companies, said that allegations from the SEC that it had broken regulations designed to protect investors were “fundamentally wrong”.
- The firm said that XRP, which is its highly popular digital currency designed to enable quicker online money transfers, was not a security but a digital currency.
- The firm’s chief executive officer Brad Garlinghouse has been charged – as has one other senior leader, as well as the firm itself.
Well-known financial technology firm Ripple has defended itself vigorously against a lawsuit from a major US regulator.
Ripple, which has partnered with many leading companies in the international money transfers sector, was told by the Securities and Exchange Commission (SEC) that it was under investigation over allegations that it had broken regulations designed to protect investors.
According to the allegations, Ripple and two of its senior leaders raised over US$1bn by offering securities that were not registered.
The lawsuit says that Ripple’s sale of XRP was not registered properly, which in turn meant that investors allegedly did not get relevant information.
Ripple described this lawsuit as “fundamentally wrong”.
XRP’s purpose is to enable fast international money transfers.
It has been widely welcomed by figures across the online money transfer industry in recent years, and has proven highly popular.
Its value has increased almost twofold in the last couple of months or so, though its value dropped significantly following the announcement.
Senior figures at Ripple issued a strongly worded statement to defend themselves against the allegations.
Brad Garlinghouse, who is the firm’s chief executive officer, is himself under investigation by the regulator.
Christian Larsen, who set up the company, is also facing charges.
However, in a press statement, Garlinghouse argued that XRP is not in fact the sort of investment product that the SEC painted it to be.
“XRP is a currency, and does not have to be registered as an investment contract,” Garlinghouse was quoted as saying.
He went on to argue that the US alone is choosing to call Ripple a security rather than a digital currency.
“In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security,” he explained.
According to press reports, the news was not a surprise to Ripple.
The firm has been believed to be expecting the move from the SEC for some time.
Press reports also indicated that Ripple believes that there is an element of precise timing to the claims.
The US government is about to move from the administration of Donald Trump to that of Joe Biden.
In press interviews, Ripple implied that this was the reason for the case being brought at the present moment.
Jay Clayton, who leads the SEC, is vacating the position early.
He was supposed to serve until June, but he will now leave at the end of 2020 – just weeks before Trump does.
To discover more about the latest goings-on with firms in the online money transfer sector, just read some of our reviews.
