The former U.S. Securities Exchange Commissioner Joseph Grundfest described the lawsuit against Ripple as unprecedented, given the upcoming change in power among the SEC’s top ranks and presidential administration next month. The former SEC commissioner said: “no pressing reason compels immediate enforcement action.” The SEC filed the lawsuit against Ripple, alleging that Ripple’s native token XRP is a security, and the blockchain firm sold them without registering. XRP’s price plunged over 25% since the news.
The lawsuit could have a negative impact on holders of XRP.
“The views of a soon-incoming Administration and Congress as to the regulation of transactions similar to those at issue can differ substantially from current perspectives,” according to the former SEC commissioner. The financial regulator claims that the sale and issuance of XRP was an unregistered security offering that gave Ripple co-founders Brad Garlinghouse and Chris Larson “the most control” over XRP. Grundfest said that the enforcement action could have a negative impact on holders of XRP, who, in his view, are “innocent third-parties.” “But simply initiating the action will impose substantial harm on innocent holders of XRP, regardless of the ultimate resolution,” he added.
Ripple intends to fight the lawsuit.
Ripple CEO Brad Garlinghouse said that they plan to fight the lawsuit in a series of Tweets. The CEO noted that the SEC – out of step with other G20 countries & the rest of the U.S. government – should not be able to cherry-pick what innovation looks like (especially when their decision directly benefits China). “We are ready to fight and win – this battle is just beginning,” he wrote. The blockchain firm has maintained an escrow account of around 50 billion XRP, or around half of the total supply, which the CTO David Schwartz claims to have been ‘gifted’ by the creators of the third-largest cryptocurrency.
