A SEC lawsuit against Ripple Labs Inc, the issuer of ripple (XRP), the third largest cryptocurrency in the world, has sent XRP into free fall. The Indian exchanges have kept the currency on their platforms but are closely monitoring the situation. The case of the US Securities and Exchange Commission (SEC) argues that XRP is a security rather than a currency and therefore the issuer should have required prior approval from the US securities regulator for its launch. It adds that Ripple Labs and two of its executives have raised over $ 1.3 billion through their offering of unregistered digital asset stocks. XRP, launched in 2013, has a market capitalization of around $ 16 billion at the time of this writing, about half of the $ 24 billion it was worth on December 21, prior to the SEC’s announcement.
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On December 22, the SEC filed a lawsuit against Ripple for an “offer of unregistered securities,” claiming that XRP was a security rather than a currency. An issue of securities in the US requires SEC approval. This caused Ripple’s price to drop from $ 0.59 on December 28 to around $ 0.28, a 47% drop. The currency is now trading at $ 0.33, slightly above recent lows. Indian cryptocurrency exchanges have expressed their development shock.
“Ripple (XRP) is one of the most popular cryptocurrencies. It was also among the most traded tokens on WazirX. The SEC’s lawsuit against Ripple is shocking. Given the uncertainty of this situation, we will continue to monitor the development of the cause and then take the necessary steps, “said Siddharth Menon, Co-founder and COO, WazirX. However, so far the main exchanges have not moved to remove XRP.
Neeraj Khandelwal, co-founder of CoinDCX added: “Although the news of Ripple sued by the SEC is a rather important event, we are following developments closely and currently await further information on the matter before making a decision.”
Cryptocurrency professionals have also made a distinction between XRP and other cryptocurrencies.
“Cryptocurrencies such as Bitcoin and Ethereum can be mined by anyone. There is no issuer and owner. This has never been the case with XRP. Ripple Labs owned 98% and issued some each year. The company. set the offer (100 billion tokens). This makes it more like a security than a cryptocurrency, “said Gaurav Dahake, CEO, Bitbns, a cryptocurrency exchange.
“XRP was extremely popular in India in 2017 and the country accounted for a high share of global volumes. That was no longer the case in 2020, even before the SEC lawsuit. At Bitbns, XRP volumes would be 6-7% of the total. Up to to the point where there will be no regulatory clarity on XRP, it will be largely volatile and investors can steer clear of it as it may be removed from US-based trading platforms that have a high share of trading for XRP. Bitbns does not has suspended trading for XRP, but to protect our users we have not allowed users to invest in SIP in XRP, “he added. The US SEC ruling could affect other regulators as well, including India Sebi on the regulation and governance of the cryptocurrency market.