The SEC also attacks the Ripple stablecoin (XRP)

There is no peace for Rippleone of the historic cryptocurrencies, in dispute with the SEC for some time, the US body that controls the stock market (the equivalent of our Consob), which accuses the company of having sold unregistered securities (i.e. the Ripple cryptocurrency, which the SEC compares to a stock, ed.) on the market.

There complaints it has been going on for several years and affects not only Ripple but also the majority of altcoins, which the SEC considers to be equivalent to stocks.

Alone at the moment Bitcoin is excluded (the SEC considers it a commoditiesi.e. a raw material like gold, ed.) and there are uncertainties even for Ethereum.

According to the latest news coming from the USA, the US Securities and Exchange Commission (SEC) would also have targeted the new stablecoin proposed by Ripple.

In a May 7 release, the SEC described the upcoming token from Ripple as a “unregistered crypto asset“.

In fact, the regulator did not explicitly mention the “stablecoin” but referred to Ripple’s April 4 press release, which announced the issuance of a digital asset with a nominal value in dollars.

Ripple revealed plans to issue a stablecoin in April, but has not provided further details on the token since then. Here is the text of the statement:

The stablecoin market is booming – around $150 billion today, and expected to surpass $2.8 billion by 2028. There is a clear demand for trust, stability, and utility. That’s why later this year we will launch a stablecoin pegged 1:1 to the USD on the XRP Ledger and Ethereum.

According to the documents, this stablecoin proposal is further evidence that Ripple will continue to engage in unregulated activities if a permanent injunction is not granted.

Ripple plans to issue a new unregistered cryptocurrency. See the press release of 4 April 2024 (Ex. 1). And the Court has already ruled that institutional ODL sales of Ripple through 2020 violate the law.- Securities and Exchange Commission (SEC)

XRP sales in the SEC’s sights

The SEC insisted that Ripple’s primary business has been the unregistered sale of XRP, and will continue to do so unless an injunction is granted.

Ripple’s ongoing activity puts it in a position where “breaches can be expected. (…) Ripple’s main activity continues to be, as it has been since 2013, the unregistered sale of XRP. – Securities and Exchange Commission (SEC)

According to Finbold’s analysis, which monitors and reports the company’s monthly sales, these follow a precise pattern and are publicly available data.

Ripple unlocks 1 billion XRP from vaults under its control the first day of each month. Subsequently, the treasury sets aside approximately 20% of the unlocked amount for monthly sales at strategic times.

The SEC proposed a $2 billion fine

The SEC also insisted that the Court impose a heavy penalty on Ripple to discourage the company and other imitators. The regulator fined Ripple a fine of almost $2 billion, but the company argues that the Court should reject this request, proposing a civil penalty not exceeding 10 million dollars.

Ripple’s Chief Legal Officer, Stuart Alderotycriticized the SEC’s request as baseless, saying it is another example of the regulator’s failure to enforce the law.

Alderoty also highlighted the SEC’s lack of respect for cryptocurrency regulatory frameworks in other jurisdictions, where XRP has no issues whatsoever.

The SEC lawyer’s response, however, was equally astute:

“That’s like saying a restaurant in New York has to get a liquor license because it already got a fishing license in California: absurd.“.

XRP Price Analysis

at the time of writing, XRP is trading at $0.5166 per token, down 2.76% in the last 24 hours according to the chart CoinMarketCap.

In short, XRP investors and Ripple supporters were anxiously awaiting the new stablecoin, which could now be postponed given current developments.

After all, the one between the SEC and Ripple it’s a historic battle, also because Ripple is considered a crypto which is not very decentralized and has distinctly corporate objectives.

At the moment the legal battle, not only for the new stable coin, is still ongoing. If we wanted to give a score to the story, we are in the middle of a draw.

To the partial victory of Ripple, when the judge had decreed that only sales on the primary market (i.e. in presale or ICO) would be considered outlawed, and not those on the secondary market (i.e. on exchanges, which in fact kept XRP in their lists) , a second judge called everything back into question, scoring a point for the SEC.

In short, the ball is back in the center, all that remains is to wait to see what will happen in the coming months.

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