The US Securities and Exchange Commission last year was hostile to cryptocurrency. In March 2020, the Commission in the SEC versus Telegram case won a global lawsuit against the proposed issuance of Grams via Telegram, with the result that many years of innovative work were canceled even when there was no allegation of fraud. So, on the last day of September 2020, Judge Alvin K. Hellerstein hopes that Kik Interactive will decide the SEC’s proposal for a final SEC decision against Kik Interactive, as Kik was found to have sold the securities. when Kin issued cryptocurrencies. Both lawsuits were filed in the southern district of New York. On December 22, 2020, the Securities and Exchange Commission decided that it was time to launch another high-profile action by filing a lawsuit in the same region against Ripple Labs and its first and current executives, Christian Larsen and Bradley Garlinghouse, respectively, to travel across $ 1.38. … $ 1 billion from XRP sales since 2013.
The first consequences of this action were quick and serious: 24 hours after the lawsuit was filed, the XRP price fell by almost 25%. This still leaves XRP in fourth place on CoinMarketCap, with a total market value of over $ 10.5 billion.
In its complaint, the commission describes a simple pattern of XRP sales that has never been registered with the SEC or prosecuted under any registration exemption. This corresponds to the continued practice of illegal sale of unregistered and unused securities under section 5 of the Securities Act of 1933, in the Commission’s view.
For readers unfamiliar with the legal process, it may seem unusual for the case to go to federal court in New York, especially since Ripple is headquartered in California and both live there. However, Ripple has an office in the southern region of that state, and Garlinghouse made several announcements while in New York, and large XRP sales were made to New Yorkers. In legal jargon, this will make places in the Southern District of New York suitable.
In addition, it may come as a surprise to some that Larsen and Garlinghouse are personally named as part of a procedure that primarily aims to restore XRP, allegedly illegally sold to Ripple, through their wholly owned XRP II LLC. They are so named because they also sold large quantities of XRP separately – 1.7 billion from Larsen and 321 million from Garlinghouse – and because the SEC claims they “helped and facilitated” the sale of Ripple.
Help and participation is one of the reasons for an action based on significant behavior from a third party where the facilitator and initiator voluntarily and consciously participates to contribute to the project’s success. In this case, Ripple will be the principal offender, and both Larsen and Garlinghouse were allegedly actively involved in the Ripple XRP sales structure with the intent of allowing the company to raise money without XRP registration under federal securities laws or to meet any requirements. … registration exemption available.
The main part of the complaint is an overview of digital assets, describes the SEC’s publication of Ripple’s history and marketing work in relation to XRP, and explains how XRP, according to the commission, performs elements of the Howey investment contract test under federal securities laws. . and trying to clarify how Larsen and Garlinghouse were involved in today’s sale.
In addition to removing all “illegal income”, the required order permanently prohibits the defendants from selling unregistered XRP or participating in any way in the sale of unregistered and unlisted securities. It would also prevent them from participating in any digital security review and would try to impose unspecified civilian financial sanctions.
A short story about Ripple and XRP
The idea for today’s XRP arose in late 2011 or early 2012, before the company changed its name to Ripple. XRP Ledger, or programming code, acts as a peer-to-peer database distributed over a network of computers that, among other things, record transaction data. To reach agreement, each server in the network evaluates proposed transactions from a subset of nodes that they hope they will not bypass. These trusted sites are known as Server Unique Site List or UNL. While each server defines its own trusted nodes, the XRP Ledger requires a high degree of overlap between the trusted nodes that each server selects. To facilitate such a placement, Ripple UNL publishes a proposal.