For almost every mainstream cryptocurrency available on the market, 2020 has been a great year. For most, 2021 looks very promising, but this is not the case for XRP.
The Securities and Exchange Commission (SEC) officially charged Ripple Labs and two of its executives with the sale of over $1 billion in unregistered securities. Now, former investors are suing the SEC. It seems that XRP holders do not approve of the token being labelled as a security by the SEC. As such, they are taking the government to court over the harm declaring XRP a security causes them.
What does the petition entail?
The XRP investors who filed this petition state that the SEC is not doing its best to protect American investors. Those investors argue in the first point that declaring XRP a security is actually a disservice to investor interests. This result is the opposite of what the SEC claims it is doing.
In its second point, the petition states,
“As chairman of the SEC, it was Jay Clayton’s (Clayton) fiduciary duty to enforce the SEC mission statement. Instead of protecting investors and sharing information to help investors make informed decisions the Respondent knowingly and intentionally caused multi-billion-dollar losses to innocent investors who have purchased, exchanged, received and/or acquired the Digital Asset XRP, including the named Petitioners, and all others similarly situated”.
The petitions claim that the SEC had almost seven years to make an official statement or work with Ripple Lab and its executives. This time frame, they say, was more than enough for the government to act. In the eyes of the petitioners, for the SEC to bring these charges now is unjust. Worse yet, the move cost investors billions of dollars of ‘unnecessary’ lost.
The petition continues that Jay Clayton, the head of the SEC, acted with improper motive and subjected Ripple Labs and XRP to irreparable harm. They point to the SEC views on Bitcoin and Ether as non-securities, and argue the same for XRP. They see that the SEC should view XRP, the third largest cryptocurrency by market cap (now fourth according to Coin Gecko, a cryptocurrency market cap aggregator), as a non-security. Moreover, they cite the use of XRP as a ‘currency’ by over 150 consumer and commercial applications.
What is XRP?
XRP is the native cryptocurrency of Ripple, an enterprise blockchain platform meant to facilitate payments and remittance. The Ripple network claims to be able to do international transactions instantly for a fraction of the cost of the traditional money transferring system.
Until recently, Ripple partnered with many banks. XRP was listed on almost every cryptocurrency exchange before the charges were filed against Ripple. Following the announcement, many partners and exchanges suspended their services until everything with Ripple clears up legally.