The SEC complains that Ripple co-founder and current CEO were involved in the raising of funds beginning in 2013 through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide.
The complaint alleges that Ripple distributed billions of XRP in exchange for non-cash consideration, such as labor and market-making services. SEC suggests that in addition to structuring and promoting XRP sales to finance the business, the founder and CEO effected personal unregistered sales of XRP which totaled $600 million. The defendants failed to register their offers and sales of XRP or to satisfy any exemption from registration which violates the registration provisions of federal securities laws.
“Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies,” said Stephanie Avakian, Director of the SEC’s Enforcement Division.
“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”
Meanwhile, 133,152,655 XRP has been transferred from Jed McCaleb Settlement to Jed McCaleb Wallet, a Whale Alert tweet reveals.
Many project that the price of XRP could dip even lower as a result of news about the charges surfacing. It may be too early to decide on the fate of XRP as more details will be needed to ascertain the stance of the law on Ripple’s future. The price of the digital token could rise again if the decision of the SEC and courts with respect to Ripple’s actions is favourable for the digital payments company.