{"id":33825,"date":"2020-12-23T00:38:52","date_gmt":"2020-12-22T22:38:52","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=33825"},"modified":"2025-08-28T15:49:34","modified_gmt":"2025-08-28T12:49:34","slug":"sec-files-suit-against-ripple","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/sec-files-suit-against-ripple\/","title":{"rendered":"SEC files suit against Ripple"},"content":{"rendered":"<p>The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Ripple. The agency alleges that the California blockchain company sold unregistered securities in the form of XRP tokens to retail investors over seven years.<\/p>\n<p><!--more--><\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">SEC charges Ripple and two executives with conducting $1.3 billion unregistered securities offering <a href=\"https:\/\/t.co\/3VP23RpSyV\">https:\/\/t.co\/3VP23RpSyV<\/a><\/p>\n<p>\u2014 SEC_News (@SEC_News) <a href=\"https:\/\/twitter.com\/SEC_News\/status\/1341477833810522114?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The SEC said that over this period Ripple raised $1.3 billion. In the screenshot below you can see that retail-investor sales exceeded the institutional figure.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">They sold more to the XRP army than they did to actual institutions LMFAO jesus <a href=\"https:\/\/t.co\/Vs3iJgRXZ7\">pic.twitter.com\/Vs3iJgRXZ7<\/a><\/p>\n<p>\u2014 KING CO\u0e3fIE \ud83c\udf19 (@CryptoCobain) <a href=\"https:\/\/twitter.com\/CryptoCobain\/status\/1341497434149675008?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The defendants named in the suit also include CEO Brad Garlinghouse and co-founder Chris Larsen, whom the agency describes as \u201clarge holders of the security.\u201d According to the filing, the two together sold tokens worth $600 million. Garlinghouse publicly spoke of being \u201cvery long,\u201d hinting that he was holding his tokens, while actually selling them.<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p dir=\"ltr\" lang=\"en\">Garlinghouse often talked about how he was \u00abvery long\u00bb XRP without disclosing that he was selling 321 million XRP to lock in a fortune. <a href=\"https:\/\/t.co\/53dd9ENTEQ\">pic.twitter.com\/53dd9ENTEQ<\/a><\/p>\n<p>\u2014 Nathaniel Popper (@nathanielpopper) <a href=\"https:\/\/twitter.com\/nathanielpopper\/status\/1341490850933612544?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/p>\n<p>Ripple paid for various services with tokens, including market making, according to the Commission.<\/p>\n<p>According to the filing, the XRP-based payment network (On-Demand Liquidity, ODL) attracted only 15 money-transfer companies, none of them banks. The reason, allegedly, is the high costs that ODL is meant to solve. The SEC found that the California company subsidises the use of this solution for clients, making the arrangement attractive for them. For example, in the second quarter of this year <a href=\"https:\/\/u1f987.com\/en\/news\/moneygram-received-15-1-million-in-xrp-from-ripple-in-q2\">MoneyGram received $15 million from Ripple in the form of incentives<\/a>.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Ripple\u2019s CEO often talked up the value of XRP by citing the intense interest from the financial industry.<\/p>\n<p>The SEC says that today only a few companies are using it and they are only doing so because of big payments from Ripple. <a href=\"https:\/\/t.co\/0Bnx0tzJ7Z\">pic.twitter.com\/0Bnx0tzJ7Z<\/a><\/p>\n<p>\u2014 Nathaniel Popper (@nathanielpopper) <a href=\"https:\/\/twitter.com\/nathanielpopper\/status\/1341493597183471616?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/p>\n<p>This suggests that Ripple was effectively paying clients to secure volumes on ODL.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Perhaps the single most damning details from the Ripple complaint:<\/p>\n<p>The main financial company using XRP, a money transmitter, told Ripple it was much more expensive than alternatives and only agreed to use it because Ripple was paying it to do so. <a href=\"https:\/\/t.co\/h9ZJVnGAQC\">pic.twitter.com\/h9ZJVnGAQC<\/a><\/p>\n<p>\u2014 Nathaniel Popper (@nathanielpopper) <a href=\"https:\/\/twitter.com\/nathanielpopper\/status\/1341500796836302849?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/p>\n<p>The document also cites Ripple&#8217;s chief technology officer David Schwartz:<\/p>\n<blockquote>\n<p>\u201cThe public strategy of Ripple was to do whatever was necessary to maximise the price of XRP during the period that would allow us to sell what we have.\u201d<\/p>\n<\/blockquote>\n<p>The suit will be heard in the federal court in the Southern District of New York. The SEC accuses the defendants of violating the registration provisions of the Securities Act of 1933 and seeks a court order barring further sales, the return of all funds raised with restitution and civil penalties.<\/p>\n<p>XRP&#8217;s price reacted to the news with a sharp drop.<\/p>\n<div id=\"attachment_120321\" style=\"width: 1034px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-120321\" class=\"wp-image-120321 size-large\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-1024x668.png\" alt=\"SEC files suit against Ripple\" width=\"1024\" height=\"668\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-1024x668.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-300x196.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-768x501.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-1536x1002.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/Snimok-ekrana-2020-12-22-v-23.41.02-2048x1337.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p id=\"caption-attachment-120321\" class=\"wp-caption-text\">XRP\/USD, hourly chart. Data: TradingView.<\/p>\n<\/div>\n<p>As reported earlier, Ripple warned the community about the impending suit in advance.<\/p>\n<p>Even before the filing, Garlinghouse said the case was an attempt by outgoing SEC Chair Jay Clayton to curb innovation in the Bitcoin and Ethereum industries. In one filing, Ripple describes itself as \u201ca better alternative to Bitcoin.\u201d The company also calls Bitcoin and Ethereum \u201cChina-controlled\u201d virtual currencies.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Ripple declares itself \u00aba better alternative to Bitcoin\u00bb and Bitcoin and Ether \u00abChinese-controlled\u00bb in a last ditch effort to save themselves. Have you no modesty <a href=\"https:\/\/twitter.com\/Ripple?ref_src=twsrc%5Etfw\">@Ripple<\/a>? No shame?<a href=\"https:\/\/t.co\/GqRzoKaGuK\">https:\/\/t.co\/GqRzoKaGuK<\/a> <a href=\"https:\/\/t.co\/81zOM9k2uN\">pic.twitter.com\/81zOM9k2uN<\/a><\/p>\n<p>\u2014 Fred Ehrsam (@FEhrsam) <a href=\"https:\/\/twitter.com\/FEhrsam\/status\/1341222407672123405?ref_src=twsrc%5Etfw\">December 22, 2020<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/p>\n<p>In the view of the executive, <a href=\"https:\/\/u1f987.com\/en\/news\/brad-garlinghouse-says-regulator-is-preparing-an-attack-on-ripple\">Trump administration officials are trying in a parting shot to harm the industry.<\/a> He expects greater understanding from the Biden administration \u2014 he was a donor to its campaign.<\/p>\n<p>Ripple is ready for the court battles and has pledged to stand up for the entire industry.<\/p>\n<p>In late November, Garlinghouse said that <a href=\"https:\/\/u1f987.com\/en\/news\/brad-garlinghouse-xrp-recognised-as-a-security-would-not-derail-ripples-business\">recognition of XRP as a security in the United States would not undermine the company&#8217;s business<\/a>, since 90% of RippleNet&#8217;s customers are located abroad. A month earlier Larsen warned that <a href=\"https:\/\/u1f987.com\/en\/news\/ripple-threatens-to-leave-the-united-states-over-excessive-cryptocurrency-regulation\">Ripple would leave the United States because of the \u201cterrible regulatory lag.\u201d <\/a><\/p>\n<p>This is not the first suit against the company \u2014 it has been in litigation with investors who believe XRP is an unregistered security for two years. Ripple and Garlinghouse are named defendants in the Bitcoin Manipulation Abatement LLC suit, overseen by attorney Pavel Pogodin.<\/p>\n<p>In December 2019, Ripple closed a $200 million Series C funding round. At the time, the company was valued at $10 billion.<\/p>\n<p style=\"margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;\"><a style=\"text-decoration: underline;\" title=\"View SEC against Ripple on Scribd\" href=\"https:\/\/www.scribd.com\/document\/488946974\/SEC-%D0%BF%D1%80%D0%BE%D1%82%D0%B8%D0%B2-Ripple#from_embed\">SEC against Ripple<\/a> by <a style=\"text-decoration: underline;\" title=\"View ForkLog's profile on Scribd\" href=\"https:\/\/www.scribd.com\/user\/456422024\/ForkLog#from_embed\">ForkLog<\/a> on Scribd<\/p>\n<p><iframe loading=\"lazy\" id=\"doc_49213\" class=\"scribd_iframe_embed\" title=\"SEC \u043f\u0440\u043e\u0442\u0438\u0432 Ripple\" src=\"https:\/\/www.scribd.com\/embeds\/488946974\/content?start_page=1&#038;view_mode=scroll&#038;access_key=key-e5xxy6JyiOvxpwpked74\" width=\"100%\" height=\"600\" frameborder=\"0\" scrolling=\"no\" data-auto-height=\"false\" data-aspect-ratio=\"0.7729220222793488\"><\/iframe><\/p>\n<p>Subscribe to ForkLog news on Telegram: <a href=\"https:\/\/t.me\/forklogfeed\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">ForkLog Feed<\/a> \u2014 full news stream, <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">ForkLog<\/a> \u2014 the most important news and polls.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Ripple. The agency alleges that the California blockchain company sold unregistered securities in the form of XRP tokens to retail investors over seven years.<\/p>\n","protected":false},"author":1,"featured_media":33826,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1162,112,128,26],"class_list":["post-33825","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-court-cases","tag-ripple","tag-sec","tag-usa"],"aioseo_notices":[],"amp_enabled":true,"views":"33","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/33825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=33825"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/33825\/revisions"}],"predecessor-version":[{"id":33827,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/33825\/revisions\/33827"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/33826"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=33825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=33825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=33825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}