In what has a huge ripple effect in the crypto industrythe SEC has filed a lawsuit that considers the XRP cryptocurrency token an unregistered security. Those on the defensive look to previous cases of EOS and KIN as examples of launched tokens that barely received a slap on the wrist, paid a fine and continued their happy ways.

However, a crypto analyst with a strong understanding of the law explains exactly why this Ripple lawsuit is particularly bad, and why XRP investors in the US are rightly concerned.

Ripple Lawsuit: SEC Fires Shot Heard Round The Crypto Industry

This week first the CEO of Ripple broke the news to the media that he was expecting a lawsuit from the United States Securities and Exchange Commission.

The crypto market took a break to process the new information and consider the possible impact of what was to come, and then XRP plummeted once investors got a grip on the seriousness.

Related reading | Ripple Lawsuit Triggers XRP Led Altcoin Apocalypse

Retail investors panicked, and even major US hedge funds have now liquidated their assets to remain compliant with US law. Major exchanges such as Coinbase are expected to release the altcoin The next.

It immediately caused a drop in the cryptocurrency’s total market cap, billions bleed in hours. And while the “XRP army,” analysts and supporters have flocked out why Ripple will be okay, and so are their favorite centralized cryptocurrency, there is serious risk in this situation compared to others.

    xrp sec lawsuit

A look at the aftermath of the SEC lawsuit. However, support is still holding... | Source: XRPUSD on TradingView.com

Why the XRP suit cannot be compared to EOS or KIN cases

XRP supporters who stick to what they can do can find comfort knowing that the companies behind EOS and KIN tokens were able to successfully settle with the SEC, pay their fines and move on.

Adam Cochran, Professional Analyst and Partner at Cinneamhain Ventures breaks out why the Ripple case is different.

First, the SEC claims that XRP is still around today an unregistered security, while EOS and KIN tokens were only available at the time of sale. They also have documentation on centralization, which is what the crypto community often disliked the most about XRP.

Related reading | Ripple Effect: What the XRP SEC Lawsuit Says Against New Crypto Projects

Ripple executives Brad Garlinghouse and Chris Larsen are explicitly named in the case as liable. Cochran also says exchanges will be needed remove XRP immediately or run the risk of violating securities laws themselves. The SEC has issued a statement clarifying the situation, but others have added that while some leniency is being given to exchanges that have offered the token to clients so far, it does not give them the freedom to continue doing so now XRP has been considered a certainty.

Finally, the case can last for years XRP will suffer significantly as a result.

Featured image from Deposit Photos, Charts from TradingView.com





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