In December 2020, the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs Inc. and its executives, accusing Ripple of raising over $1.3 billion through illegal means. As per the SEC complaint, the key persons held accountable for making substantial gains in the process included Christian Larsen, Ripple co-founder, and Bradley Garlinghouse, the current Ripple CEO.
Between 2013 and 2020, Ripple Labs sold XRP tokens to raise capital worth US$1.3 billion.
However, the SEC believed that Larsen and Garlinghouse raised capital illegally as XRP was not registered security; still, it was offered to investors worldwide. The SEC had also alleged that Ripple labs availed market services for non-cash transactions wherein they paid in XRP (the native cryptocurrency of the Ripple network) to propel their token sales.
If the judgment in the Ripple Vs. SEC is in favor of SEC; XRP will be deemed a security instead of a currency in the US. This could, in turn, set a lawful precedent that results in similar cryptos classified as securities. Therefore, the case against Ripple is critical for all stakeholders within the crypto space, including investors, blockchain innovators, and lawmakers globally.
Garlinghouse proclaimed that the SEC’s battle was against Ripple and the entire blockchain industry.
In the latest development, three companies/organizations, New Sports Economy Institute, Reaper Financial, and InvestReady, have jumped into the ongoing lawsuit against Ripple.
The CEO of fintech firm InvestReady is reportedly seeking the court’s permission to file a legal document that will support the SEC in its legal suit against the blockchain company Ripple Labs.