The crypto lending platform Nexo has been ordered by several California securities regulators to halt its crypto yield product. The state claims that the company’s interest-bearing accounts qualify as unregistered securities that require proper disclosures and legal protections. The enforcement action was announced by the California Department of Financial Protection and Innovation (DFPI) on Monday. The Department said its action was part of a larger investigation of companies offering crypto interest accounts.” “The DFPI has undertaken aggressive enforcement efforts against…
The United States Securities and Exchange Commission (SEC) has taken legal action against Ripple for selling $1.3 billion worth of unregistered securities via XRP. Consequently, the price of XRP has collapsed, and some platforms have begun to delist the cryptocurrency.
SEC Goes To War With Ripple
The SEC has filed a lawsuit against Ripple, its CEO Brad Garlinghouse and co-founder Chris Larsen. The latter duo is accused of having carried out unrecorded sales of securities worth $1.3 billion, via XRP.“Ripple has raised funds, starting in 2013, by selling digital assets known as XRP in unregistered security offering to investors in the United States and around the world.
The regulatory body also added that Garlinghouse and Larsen have reportedly not recorded their personal sales of XRP, estimated at $600 million. Ripple had been in the SEC’s sights for a long time due to its cryptocurrency nature. The company even received warnings before the public rollout of its project.
“Ripple engaged in this illegal offering of securities from 2013 to today, although Ripple received legal advice as early as 2012 that under certain circumstances XRP could be considered an ‘investment contract’ and therefore as a security under federal securities laws”.
Garlinghouse had already informed the crypto community on Twitter about the intended lawsuit yesterday, saying the SEC is wrong. He believes that this is not only an attack on Ripple but against the entire cryptocurrency industry. The Ripple CEO stated that the SEC is doing everything to curb crypto innovation in the United States. This, according to him, could be followed by other suits affecting different companies in the crypto space.
Is This The End For Ripple And XRP?
The impact of the SEC legal action on XRP is already considerable. The coin price has been in free fall since yesterday and approaching the levels of late November. At the time of writing, XRP is down 30% in the past 24 hours, from $0.50 to $0.34, according to data from CoinMarketCap.
As a direct effect of the SEC’s attack on Ripple, several exchanges have begun to delist and suspend the trading of XRP. Hong Kong-based exchange OSL suspended all trading markets on XRP until further notice. At the moment, it is not known if major trading platforms will also follow suit. However, many analysts believe that exchanges with branches in the U.S are likely to delist XRP in the coming days.
The battle between the SEC and Ripple is likely to be fierce and full of twists and turns. Ripple plans to fight the legal action with all the means at its disposal. Regardless of the outcome of this case, the reputation of the company has taken a major hit. If further delisting occurs on larger platforms like Coinbase or Binance, the result would be catastrophic for the cryptocurrency.