The US Securities and Exchange Commission says: They raised more than $ 1.3 billion through the offering of unregistered securities.
The lawsuit alleges that Ripple violated securities laws by selling the XRP cryptocurrency, which Call it The Wall Street Journal is the third cryptocurrency in the world by market value over a period of seven years starting in 2013.
According to the complaint, the illegal offer of the securities caused an information inconsistency that allowed Larsen and Garlinghouse to sell XRP to investors who did not know its risks.
According to the US Securities and Exchange Commission’s lawsuit, XRP is a security, not a virtual currency. Ripple has not provided its investors with the appropriate information they need to assess any potential risks.
According to Garlinghouse, it is a virtual currency, which means that the US Securities and Exchange Commission has nothing to do with it.
The authority previously decided that Bitcoin and Ethereum are digital currencies, And she dealt The Department of Justice with XRP as a digital currency in 2015, when Ripple filed a lawsuit over its business.
XRP differs from Bitcoin and Ethereum in an important way, as Ripple created and sold the cryptocurrency XRP, starting by providing 100 billion units at once.
Ripple owns 6.4 billion XRP, and Garlinghaus and Larsen own a large portion of it. Another 48 billion XRP is held in reserve for periodic sales.
This difference may be the reason why the US Securities and Exchange Commission claims that XRP is a security and not a virtual currency, which means that it is a tradable financial asset.
The agency said: The company distributed billions of its XRP digital currency without cash, and Larsen and Garlinghouse personally benefited about $ 600 million from their unregistered sales of XRP.
The authority has won similar lawsuits against Block.one and Kik in the past, and said that initial coin offerings by these startups were securities.