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SEC Ripple Lawsuit

The story regarding the SEC Ripple lawsuit began back in December 2020 when the Securities and Exchange Commission (SEC) filed an enforcement action against the cryptocurrency company called Ripple Labs, Inc. Ripple was founded back in 2012 in San Francisco and, over the years, it has become one of the most popular cryptocurrencies ever.

According to the complaint from SEC, the company sold its crypto token called XRP as an unregistered security. SEC calls the token like this because, according to them, it’s not a commodity or anything similar. It is a security because it was created and sold by Ripple in a centralized manner. So, it remains to be seen whether or not XRP will be considered a security or an “investment contract” under the security laws of the United States. Here are more details about the SEC Ripple lawsuit.

More on the SEC Ripple lawsuit

It’s definitely worth taking into account that SEC has already established that Bitcoin and Ethereum are not securities. This is because of their decentralized nature which is clearly derived from their blockchain origins. A blockchain is a ledger that keeps all the transactions because there is no central authority to govern and control them. Cryptocurrencies are not mined nor distributed by banks or any similar entities. Cryptocurrencies are mined by “nodes” which are distributed across a network and consist of individuals with strong computers. Taking everything into consideration, Bitcoin and Ethereum are not considered securities by SEC.

The problem with Ripple is that, according to SEC, the company has developed and distributed the crypto in a centralized manner. It seems that Ripple actually minted its entire crypto supply during its release back in 2012. As for Ripple, the company wants to review the internal discussions coming from SEC and analyze their conclusions.

Other opinions

Many professionals in the industry have criticized the SEC Ripple lawsuit. Some believe that it was done only to affect a growing industry that seems to be developing more and more. Others think that the whole lawsuit was done in a rush only one day before former SEC Chairman Jay Clayton resigned. It’s worth noting that only three of the five SEC commissioners approved of the Ripple lawsuit filing, which is the minimum.

Other opinions point to the fact that the SEC might be looking to start the implementation of some regulations concerning the crypto industry. For the moment, the outcome of the SEC Ripple lawsuit is definitely uncertain. Both parties have engaged in discussion. Moreover, the new SEC Chair, Gary Gensler, is well-versed when it comes to cryptocurrencies. He is a former teacher at MIT. This could help Ripple in the case of a favorable decision, especially moving forward.

Clearly, the SEC wants to protect people and their investments. At the same time, it fully understands the importance of cryptocurrencies and their incredible benefits. Only the future can tell what will come out of the SEC Ripple lawsuit and how/if the two parties will reach an agreement.

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