SEC affirms accusations upon Ripple in the amended lawsuit

by in Cryptocurrency News


SEC has said that Ripple CEOs Brad Garlinghouse and Chris Larsen have strongly influenced the price of XRP by increasing or decreasing the sales of their coins depending on the market situation.

In an amended lawsuit filed on February 18, the SEC confirmed its allegations of violating U.S. securities law:

"From 2013 to the present, the defendants have sold more than 14.6 billion units of securities - digital assets called XRP - in exchange for cash or other rewards worth more than $ 1.38 billion to fund Ripple and personal enrichment for Larsen and Garlinghouse," - the claim says.

The SEC claims that Ripple received legal advice back in 2012 that the XRP sale could constitute an offer of securities, but the company's management chose to ignore it. From a financial point of view, the company's strategy worked - in the following years, Ripple raised "at least $ 1.38 billion."

Larsen and Garlinghouse earned $ 600 million in profits from unreported XRP sales, according to the SEC.

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“Ripple has created an information vacuum by allowing two insiders in the company with the most control over the asset — Larsen, and Garlinghouse — to sell XRP in the marketplace. The market had only that information about Ripple and XRP, which the defendants themselves decided to disclose, ”the SEC notes.

The complaint described a case in 2015 when one of the Ripple market makers suspended the sale of XRP at the request of Garlinghouse and Larsen due to a decline in the asset's price.

According to the document, Larsen instructed the market maker to "add sales" and "wait until the market recovers from this mistake."

In 2016, the defendants were forced to adjust their profit targets for token sales in the hopes that they could “stabilize and/or increase” the XRP price.

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The SEC notes that the "information asymmetry" created by the defendants still exists, allowing them to continue selling XRP with "significant risk to investors."

Ripple General Counsel Stuart Alderoti said he was disappointed with the SEC's belated lawsuit against Ripple after years of inaction. “The SEC filed an amended suit today. There is only one legal claim left: were certain XRP allocations an investment contract? Disappointed that the SEC needed to “fix” its claim after years of waiting, ”he said.