It finally happened. After years of uncertainty, the SEC is taking decisive action against Ripple. The point in question is whether Ripple’s native XRP token is a safety or not.
Late yesterday, CEO of Ripple Brad Garlinghouse said the SEC has made a decision, and they plan to take action accordingly.
Under US securities laws, companies must register with the SEC before selling any securities. A move that Ripple fell short of.
Tweeting about the situation, Garlinghouse called this an attack on the entire crypto industry, not just Ripple. He then said the action contradicts the position of other G20 countries. And, as before mentioned, he maintains that this is harmful to the US.
“The SEC – which is out of step with other G20 countries and the rest of the US government – shouldn’t be able to choose what innovation looks like (especially when their decision directly benefits China). Make no mistake, we are ready to fight and win – this battle has only just begun.“
Today the SEC voted to attack crypto. Chairman Jay Clayton – in his latest act – picks winners and tries to limit US innovation in the crypto industry to BTC and ETH. (1/3) https://t.co/r9bgT9Pcuu
– Brad Garlinghouse (@bgarlinghouse) December 22, 2020
Garlinghouse disagrees with the SEC’s interpretation of the Howey test
In 2018 was the former SEC chairman Jay Clayton stated that Bitcoin and Ethereum are not securities.
The SEC classifies a security as an investment of money in a joint venture, in which the investor primarily expects a profit from the efforts of others.
The commitment of others means an important central third party whose efforts are a critical factor in the enterprise.
Clayton argues that both Bitcoin and Ethereum fit the bill of decentralized platforms. As such, they are not dependent on major central parties.
“When I look at Bitcoin today, I don’t see a central third party whose efforts are a major determining factor in the business. The network on which Bitcoin functions is operational and seems to have been decentralized for a while, perhaps from the beginning.
And aside from the fundraising that went with the creation of Ether, based on my understanding of the current state of Ether, the Ethereum network, and its decentralized structure, Ether’s current offers and sales are not securities transactions. “
Back in the days, Garlinghouse pointed out that Chinese mining companies control the majority of the hashing power for both Bitcoin and Ethereum. Since these are important central third parties, the SEC ruling is unjust.
In preparation for the SEC, Ripple has a summary submission on which they will base their defense.
With that, Ethereum co-founder Vitalik Buterin destroyed the document, saying Ripple clings to straws. Buterin is convinced that Ripple’s arguments about “Chinese control” have no weight when it comes to Ripple’s relationship with XRP.
It looks like the Ripple / XRP team is sinking to new levels of strangeness. They argue that their shitcoin should not be called security for * reasons of public policy *, namely because Bitcoin and Ethereum are “controlled by China”. 😂😂https://t.co/ts02JqrTrB pic.twitter.com/mKwEzGIetk
– vitalik.eth (@VitalikButerin) December 22, 2020
Buterin’s response to the document has been criticized by many, including Binance CEO Changpeng Zhao. Zhao echoed what Garlinghouse said by saying that this hinders the entire crypto industry.
– CZ Binance (@cz_binance) December 22, 2020
Ripple’s XRP is booming
XRP plummeted on the news and bounced back from the USD 0.45 support level, currently USD 0.46. What’s more, have broken under the main support when $ 0.53the expectation for further downward movement is raised.
The SEC case is going to be a long and long one. What about the price of XRP?
As noted by Alex Saunders From Nugget’s News, Ripple relies on partnerships with companies that comply with this. He said:
“I feel for $ XRP investors now in pain. I have often explained why it would never end well@ripple. Hopefully that helped some of you avoid this bullet. No compliant company will touch #XRP with this over their heads. ”
Garlinghouse talked about fighting and winning. But what are Ripple’s chances of emerging as the winner?
Source: XRPUSDT on TradingView.com