Brad Garlinghouse, the CEO of cryptocurrency firm Ripple in a recent interview with CNBC claimed that the XRP is an investment contract issued by the company. Garlingouse also reinstated that the US lacks regulatory clearance that has led to the ongoing lawsuit filed by the SEC. He went onto cite the example of many G-20 nations that have gone ahead to frame new regulations around digital currencies.
Talking about the SEC’s accusations of XRP being a security, Garlinghouse explained that if XRP would have been security then buyers of the token would also own a portion of the company which is not the case. He said,
All of the XRP that would ever circulate has already been created, so the company cannot create new tokens if we look from a regulation point of view XRP is an investment contract. Security is something when you buy it you own a part of the company and the profits… that is not true with XRP.”
SEC filed a formal lawsuit against Ripple and two of its top executives including CEO Garlinghouse towards the end of December last year accusing them of unregistered security sale amounting to $1.5 billion.
Ripple vs SEC: The Case so Far
The SEC lawsuit against Ripple was followed by several crypto platforms in the US delisting XRP from their platforms to avoid any regulatory conflict with the SEC and the price of the token also fell to a 3-year low. However, since the case hearings began a lot has changed in the original lawsuit filed by the chief regulatory body.
SEC first omitted market manipulation claims and later admitted that the sale of XRP by Ripple qualify as security and not necessarily exchanges that were offering it as well. The legal counsel of Ripple also claimed that SEC overlooked many requests from exchanges enquiring about the regulatory status of the XRP token. The SEC has also sued Kik and Telegram on similar accusations earlier.
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