Ripple executives say that the SEC (Securities and Exchange Commission) is ready to file a lawsuit against the company. SEC claims that XRP is an unlicensed security and therefore in violation.
The CEO, Brad Garlinghouse, and co-founder, Chris Larsen are the main defendants in the case if followed through. They disclosed to Fortune that SEC is planning to sue them.
Fortune’s attempt to confirm the impending lawsuit from SEC spokesperson, Judith Burns was declined.
If pursued as Ripple believes it will, the SEC could take years in court to prove that XRP is a security, not a currency. However, this battle has already been going on for sometime as SEC has been questioning XRP’s financial model.
A Continuing Battle
Way back in June 2018, the SEC determined that coins like Bitcoin and Ethereum are not considered securities rather currencies. This is due to their decentralized nature—no one company or entity controls the cryptocurrencies. Ripple’s XRP is another story.
The SEC sees XRP as a stock value of Ripple Labs and therefore not a currency. Some may argue also that XRP differs from BTC and ETH in several other ways. This includes how coins are produced.
In the case of BTC and ETH, coins are gradually “minted” through mining. For XRP, the founders create billions of coins at a time to help fund their company, Ripple Labs. The CEOs and Ripple itself holds large portions of XRP, which also makes it seem like a stock share.
Ripple on the Defense
Ripple has been defending itself for years, saying that the network controls the releasing and burning of coins, not Ripple Labs or individuals. Founders also claim that XRP acts as a remittance currency to help people send money across borders.
A Pinnacle Time in Crypto
The news of the supposed coming lawsuit comes at a pinnacle time as the Trump administration comes to a close, devastating regulations by the OCC and U.S. Treasury department pop up, and as bitcoin and other altcoins reach all-time highs.