The SEC (Securities and Exchange Commission) filed a lawsuit against Ripple Labs, alleging that XRP, Ripple Labs’ native token, was classified as a security.
According to SEC rules,
“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
Violations of this rule result in legal action, and the act is considered illegal.
Over 12 entities have come to support Ripple $XRP in their battle against the #SEC.
????Coinbase, Chamber of Digital Commerce, Crypto Council for Innovation, Blockchain Association, and Valhil Capital all have pledged legal support for Ripple. pic.twitter.com/Zrh6SQYjfO
— Crypto India (@CryptooIndia) November 4, 2022
The SEC claims XRP engaged in unlawful activities by raising over $1.3 billion through the sale of XRP in December 2020 and failing to register the offers, thereby committing a crime.
XRP is a digital token built by Ripple Labs to fast-track currency conversion. It was launched in 2012 and quickly became one of the most traded tokens in the crypto community as it solved the pressing need for easy and swift money transfers.
XRP claims that its token is not a security; there was a misunderstanding, and the company has been in and out of court for the past two years.
Ripple Labs, which appears to be the only one supporting itself in the long fight against the SEC, has received support from 12 companies. Brad Garlinghouse, the CEO of Ripple Labs, confirmed it in a tweet.
For those of you keeping count, 12 (!) amici briefs submitted. It’s unprecedented (I’m told) to have this happen at this stage. They each explain – in their own unique way – the irreparable harm the SEC will do to every facet of the US crypto economy if it gets its way. https://t.co/Na9fWq3GvO
— Brad Garlinghouse (@bgarlinghouse) November 3, 2022
In a surprising turn of events, crypto exchanges that previously opposed Ripple Labs are now supporting the company, including Coinbase.
Ripple and the SEC agreed earlier this week to settle the lawsuit before it went to trial. Hopefully, it passes and Ripple can resume normal operations.
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