Ripple Lawsuit Could Invoke Billions in Losses to 'Innocent Third-Parties,' Says Former SEC Commissioner
The crypto community is extremely curious about what will happen to Ripple Labs and the token asset XRP, after the U.S. Securities and Exchange Commission (SEC) recently filed a lawsuit against Ripple and two executives. On December 25, the large cryptocurrency exchange Bitstamp announced delisting XRP for U.S. customers, and a former SEC Commissioner thinks the lawsuit will invoke multi-billion losses to innocent third parties.
Luxembourg Crypto Exchange Drops XRP Support for US Customers: ‘Will Closely Follow the Unfolding Situation and Adapt Accordingly’
One of the most topical conversations in the crypto space, besides the all-time high prices, is the recent charges against Ripple Labs that were filed by the U.S. Securities and Exchange Commission (SEC). The SEC said that the regulator “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”
Following the SEC charges, three exchanges (OSL, Crosstower, and Beaxy) decided to drop XRP support, alongside the fund Bitwise Asset Management. On December 25, 2020, the cryptocurrency exchange based in Luxembourg, Bitstamp, announced it would be halting XRP services for all U.S. customers on January 8, 2021. In a blog post about the subject Bitstamp said:
In light of the recent SEC filing against Ripple Labs Inc., which alleges that XRP is a security, we are going to halt all trading and deposits of XRP for our US customers on 8 January 2021 at 9 PM UTC. We will closely follow the unfolding situation and continue to adapt accordingly. Our U.S. customers will still be able to withdraw XRP from Bitstamp. Customers from other countries are not affected.
SEC Action Will Impose Substantial Harm on Innocent Holders
The XRP action is also happening as SEC Chairman Jay Clayton decided to give his resignation. The SEC Commissioner, Hester Pierce, announced on Twitter that Elad Roisman has been appointed the acting Chair of the U.S. financial regulator. “Congratulations, Chairman Roisman,” Pierce tweeted on December 24. “I look forward to your leadership of the SEC,” she added. Moreover, The Block’s Frank Chaparro obtained a letter from Joseph Grundfest, a former Commissioner of the U.S. SEC.
According to a letter to Jay Clayton, Grundfest allegedly said that the Ripple lawsuit was “unprecedented” and there’s “no pressing reason compels immediate enforcement action.” “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,” the Grundfest letter details.
The former SEC Commissioner further wrote:
Simply initiating the action will impose substantial harm on innocent holders of XRP, regardless of the ultimate resolution. Upon learning of the proceeding, intermediaries will cease transacting in XRP because of the associated legal risk. The resulting reduction in liquidity will cause XRP’s value to decline.
The SEC’s acting Chair Elad Roisman also reportedly discussed the evolving cryptocurrency markets back in 2018. “The SEC must examine and re-examine its rules, regulations, and guidelines to ensure that they are still working as intended to accomplish the SEC’s mission,” Roisman said at the time. “This is most recently manifested in areas such as data protection and cybersecurity, as well as the emergence of new investments and technologies such as initial coin offerings and blockchain.”
What do you think about Bitstamp dropping XRP for U.S. customers and the letter from former Commissioner Joseph Grundfest? Let us know what you think about this subject in the comments section below.
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