Last updated on July 21st, 2023 at 09:03 pm
The U.S. Securities and Exchange (SEC) Commission initiated a lawsuit against Ripple in 2020, on allegations that Ripple had sold the XRP token to investors in 2013 through an Initial Coin Offering, raising more than $1.3 billion, without first registering the token as a security.
The case has been ongoing and will affect the cryptocurrency industry as a whole, as the SEC has decided to go after and try to make an example out of Ripple. Therefore it is complicated and has been prolonged multiple times.
For XRP to be classified as a security it needs to meet the conditions stated in the Howey Test. Which states that an asset is a security if the investment contract involves:
- An investment of money
- In a common enterprise
- With the expectation of profit
- To be derived from the efforts of others 1
Ripple is confident that the company will win the lawsuit, and has still been making significant progress outside of the U.S. The price of XRP could skyrocket if the long-running dispute ends in Ripple’s favour, as the situation has arguably suppressed the token’s price. However, if Ripple loses the case, it could severely hinder the token and open the floodgates to many other cryptocurrencies being held accountable for holding ICOs around the same period of time.
A similar case has just been resolved with LBRY, a blockchain-based file-sharing network, winning its case against the SEC, which sued it for selling its LBC tokens without registering with a regulator. Although, unlike Ripple, they did not release their tokens in an ICO, they did keep tokens for themselves in a pre-mine. Ripple has maintained that it never formally held an ICO.
The crypto world awaits U.S. District Judge Analisa Torres’ decision on the XRP SEC case which is expected in the first half of 2023.
Current price of XRP is
$0.49
24h price change of XRP:
-5.56%
Where to trade XRP:
