SEC legal action casts doubt on Ripple's standing
In a significant development, the Securities and Exchange Commission (SEC) has filed a lawsuit against Ripple, alleging that the sale of XRP was conducted as unregistered securities. This move has cast a shadow over the cryptocurrency, with the market's view on XRP indicating a decline while Bitcoin and Ethereum have soared over the past month.
The SEC's main concern is the distribution of XRP, which it argues has been operated as a 'security'. Ripple, however, claims that XRP is a cryptocurrency, not a security, and should not be subject to SEC regulation.
The lawsuit is unlikely to pass quickly, and the outcome remains uncertain. This uncertainty has potentially made Ripple and XRP too hot to handle for many household names associated with it. Notably, banks that have publicly announced partnerships with Ripple but have not made public statements regarding the current SEC dispute include SBI Holdings (Japan), Standard Chartered (UK), Santander Bank (Spain), American Express (USA), and PNC Bank (USA).
Meanwhile, Ripple continues to hold a significant portion of XRP. More than half of the cryptocurrency is currently owned by the company. CEO Brad Garlinghouse sold over 321 million XRP, generating $150 million, while Ripple's founder, Chris Larsen, and his wife sold over 1.7 billion XRP, earning around $450 million.
In its early days, XRP's supply and distribution was centrally controlled. However, the cryptocurrency's role in the financial sector has expanded, with companies like MoneyGram utilising Ripple's FX blockchain trading platform (ODL) for the purchase and sale of four currencies. It's worth noting that MoneyGram is not dependent on Ripple, as it continues to utilise other traditional FX trading partners.
In a separate development, another US regulator, the OCC, has opened a route for banks to use stablecoins this week. This move could potentially open up new opportunities for the cryptocurrency market, including Ripple and XRP, if they can navigate the legal challenges they currently face.
The future of Ripple and XRP remains uncertain as they navigate both the legal landscape and the volatile crypto market. As more information becomes available, it will be interesting to see how these developments unfold.
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