Blockchain company Ripple has been running an unregistered offering, akin to an unlicensed stock sale, according to a complaint filed Tuesday by the US Securities and Exchange Commission.
The suit revolves around XRP , launched in 2013, which Ripple calls a cryptocurrency. The SEC says XRP is an “unregistered securities offering to investors in the US and worldwide.”
“Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies,” said Stephanie Avakian, SEC Enforcement Division director, in a statement.
Tuesday’s suit amounts to one of the most significant federal actions taken to shift unlicensed cryptocurrencies under the umbrella of more traditional registered securities. As the crypto industry has exploded in the last decade, the SEC and other agencies have struggled to classify and regulate them. In a separate action, the US Treasury’s Financial Crimes Enforcement Network last week proposed new disclosure rules to better keep tabs on crypto wallets.
XRP’s value had fallen by about 22% by early Wednesday, having almost completely wiped out the gains of the past month that took it to two-year highs.
The San Francisco company, along with co-founder Christian Larsen and CEO Bradley Garlinghouse, were named in the suit. The executives have personally sold about $600 million in XRP, the SEC said.
Ripple violated federal securities laws by not registering XRP as a security, which would require greater disclosure, giving investors a more complete background as they value it, the SEC said.
“Here, we allege that Ripple and its executives failed over a period of years to satisfy these core investor protection provisions, and as a result investors lacked information to which they were entitled,” said Marc P. Berger, deputy director of the SEC’s Enforcement Division.
Garlinghouse late on Tuesday said the SEC hadn’t given the company “clarity” on how its XPR offering is classified – currency or security.
“To be clear, this is all based on their illogical claim that XRP is, in their view, somehow the functional equivalent of a share of stock,” Garlinghouse wrote on Ripple’s company blog .
Ripple had begun its campaign against the SEC suit before it was even filed. Garlinghouse had let loose on the SEC on Twitter, saying in part that its chair, Jay Clayton, was “taking notes from the Grinch this holiday season.”
The suit comes just weeks before Clayton is set to depart from his SEC post, as a new administration takes over Washington.
Two of Ripple’s lawyers on Tuesday said the SEC’s suit was without merit.
Michael Kellogg, of Kellogg, Hansen, Todd, Figel & Frederick, said in a statement: “This complaint is wrong as a matter of law. Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency. Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.”
Bitcoin Bulls Run Amok: Short Traders Hit with $90 Million Loss Amidst Unstoppable Surge
The relentless surge in Bitcoin’s prices has left short traders reeling as highly leveraged futures bets against the cryptocurrency incurred losses totaling $90 million on Tuesday alone.
This follows an additional $70 million in short liquidations on Monday, contributing to Bitcoin’s remarkable climb from $39,000 to $44,000 this week.
According to data from CoinGlass, most of these liquidations transpired on major crypto exchanges, including Binance, OKX, and Huobi.
The substantial liquidation figures have the potential to signal either a local top or bottom in a significant price movement, providing valuable insights for traders looking to strategically position themselves.
The surge in trading volumes, up by 25% in the past week, coupled with the growth in open interest from $17.2 billion to $20.2 billion since the beginning of December, underlines the increased market activity around Bitcoin.
Several factors are contributing to Bitcoin’s recent growth. Optimism is swirling around the potential approval of a spot exchange-traded fund (ETF) in the U.S., with traders factoring in anticipated rate cuts, buoying riskier assets like technology stocks and Bitcoin.
Additionally, the possibility of sovereign adoption is gaining traction as leaders in major economies express a Bitcoin-friendly stance.
Over the weekend, a notable group of traders committed to a $200 million BTC futures position, emphasizing the sustained demand for exposure to Bitcoin.
Amid continuous updates and changes in spot ETF applications, some industry observers foresee Bitcoin prices surpassing the $48,000 level in the coming weeks, further intensifying the cryptocurrency’s bullish momentum.
Dogecoin (DOGE) Rides Bitcoin Surge, Gains Over 10% in 24 Hours
The cryptocurrency market is witnessing a resurgence of risk appetite as more investors jump on unconventional choices such as Dogecoin (DOGE), Shibacoin, Memeland, etc.
In the past 24 hours alone, DOGE has surged by over 10% to $0.10 a coin for the first time since April following Bitcoin’s climb from $38,000 to $44,000.
This surge, coupled with the rising price, validates the upward trajectory of DOGE, signaling growing investor interest.
Funding rates on various exchanges have also experienced a substantial surge, hitting an annualized 50% or more.
These rates, reflecting a steep premium in perpetual futures relative to spot prices, indicate a prevalent bullish sentiment among investors.
It underscores their collective optimism, suggesting a belief that prices are poised for further upward momentum.
Joke cryptocurrencies like DOGE have historically exhibited high-beta characteristics, closely mirroring Bitcoin’s movements but often with greater intensity.
Investors are advised to exercise caution and monitor DOGE’s potential for extreme bullish action relative to Bitcoin, serving as a potential indicator of speculative exuberance typically observed in the latter stages of a widespread bullish trend.
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