The US Securities and Exchange Commission lawsuit against Ripple (XRP) has been moving the crypto scene for eight months now. So it’s time for an interim assessment and a look at the fundamentals of this case.
Even the start of this crypto drama was spectacular: Shortly before Christmas 2020, Ripple went public and warned: One must reckon with an indictment by the US Securities and Exchange Commission over XRP. The price of Ripple (XRP) then went to its knees, even before the SEC itself published its lawsuit with a claim for damages of at least 1.3 billion US dollars the day after. The festival was spoiled for investors. In the months that followed, it became more and more clear that the SEC vs. Ripple showdown was about a precedent. We have reported on it continuously and want to take a look at the essentials in ten points as an interim balance sheet.
1. Neither SEC nor Ripple show any willingness to compromise. The new SEC chief Gary Gensler has even announced that his authority will monitor the crypto industry more closely. Ripple, in turn, has hired dozens of top lawyers and is trying to operate as usual outside of the US.
2. The SEC accuses Ripple, and in particular CEO Brad Garlinghouse and co-founder Christian Larsen, of having sold XRP with false information for years. Ripple never obtained approval from the SEC for the sale of XRP, although they knew that XRP should be classified as “securities”.
3. The process against Ripple has been prepared for a long time by the SEC. The SEC’s proceedings against the Messneger services KIK and Telegram for issuing their own cryptocurrencies were probably test runs for the SEC in order to knock down legally binding strategies in front of the provisional final boss Ripple.
4th Because the SEC is proud of its history, in which fundamental and high-profile cases are not lost. Here at XRP and Ripple, the SEC obviously wants to prove how many crypto projects systematically lie. The SEC’s job is to protect investors. Since she does not shy away from the giants of the financial industry, she has earned a lot of reputation among US citizens.
5. The SEC’s core argument against Ripple: XRP has never – as advertised – been used significantly as a substitute currency. Even in the best years, a maximum of 1.6 percent of all XRP were used to accelerate money transfers and save fees for banks and financial service providers. For this reason alone, XRP must be interpreted as a direct participation in Ripple.
6th Ripple is consistently in the black – but not because of XRP, but because of its software, which is attractive for the financial world. Banks like to buy and use this – but the use of XRP is not activated. Ripple has always slipped around this information in its quarterly reports and avoided numbers. But the SEC has calculated and Ripple does not deny it.
7th This tends to result in: XRP is a cryptocurrency with no use or purpose. As a crypto currency, however, it was sold so that Ripple could escape regulation by the SEC and sellers could also make fraud out of the executive floor. The SEC sees this approach as a scam that has also been and can be common practice with other ICOs.
8th. Therefore, with the Ripple and XRP cases, the SEC also wants to put pressure on US politicians to basically allocate them more rights and budget for the crypto industry. The first hearings in the court in New York are imminent and should reveal some unsavory aspects of internal communication at Ripple.
9. Ripple initially hoped for solidarity from the crypto industry. It did not start – on the contrary: XRP is consistently delisted from US crypto exchanges. Instead, the SEC encounters a middle-class audience that may only trust the crypto industry to a limited extent or not at all.
10. A defeat in court would be fatal for the SEC. The SEC would lose its horror for the crypto industry. For Ripple, the end of XRP could also mean the end of the company and those responsible would be ruined privately, if not behind bars.
Conclusion: litmus test Ripple and XRP
Here with us you can read about bubbles, scams, grotesques and risks in the crypto industry as well as about the huge opportunities and innovations in this industry. In contrast to Bitcoin (BTC) and Ethereum (ETH), XRP lacks a concept that works in reality – we have been pointing this out for years and we also report how Ripple organizes its day-to-day business. Without being able to predict the outcome of the SEC against Ripple litigation – this case has the potential to set the course for the crypto industry in the USA.
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