There has been significant criticism directed towards Ripple Labs, a blockchain firm, regarding the handling of XRP, its in-house token. Now, it appears that the Securities and Exchange Commission (SEC) in the US is gearing up to rope the company into a lawsuit. Even though the company is ready to fight off any attacks by the agency, people in the crypto industry are sharing their opinion about the whole matter. It was reported by Fortune Magazine earlier this week that a lawsuit was being finalized by the SEC against Ripple Labs over its XRP token and its security status. The news source referred to sources at the company, including Brad Garlinghouse, the company’s chief executive.
It was noted in the report that co-founder of Ripple Labs, Chris Larsen, and Garlinghouse would be named in the lawsuit. While the reports have not been confirmed by the SEC as yet, Garlinghouse said that the case would be brought shortly. He even shared the report on Twitter and made some accusations against the SEC. According to the CEO, since Jay Clayton, the Chairman of the agency, was set to step down this month, he was looking to score a big win as his final act.
Garlinghouse said that it didn’t matter to Clayton that he could end up stifling innovation in the crypto industry. He said that the agency was out of step of the rest of the US government and other G20 countries, and it shouldn’t be able to decide what innovation should be like, particularly when China benefits from their decision. He said that they were also prepared to do battle and win. The case against the blockchain company is not exactly a new one. There has been a lot of controversy associated with XRP and its status as a security.
A number of other large cap cryptocurrencies, including Ether and Bitcoin, have also dealt with such debates in the past. However, Ripple’s handling of XRP has recently put it under fire. Currently, the company has an escrow account that comprises of around 50 million XRP, which is almost half of the total supply circulating in the market. The company is free to mint tokens and burn them, which has brought criticism that the operation is centralized. A number of disgruntled investors have brought class-action lawsuits against the company, but it has managed to stay functional. To defend itself, Ripple Labs had recently published a Wells submission.
It claimed that the SEC was going to cherry pick XRP as a security. The firm highlighted that by giving XRP security status, unlike Ether and Bitcoin, the agency was destroying innovation in the country. Ripple did not have any evidence of this fact, but alleged that Bitcoin and Ether were Chinese-controlled assets and the SEC has not declared them as securities. If the agency succeeds in its suit against Ripple Labs, it would be ceding innovation to the chief economic rival of the United States. But, some others in the industry have also accused Ripple of being a scam.