Ripple is once again in trouble with the US Securities and Exchange Commission (SEC) following its highly anticipated stablecoin announcement. The stablecoin, which will be pegged to the US dollar, is expected to fund existing stablecoins such as Tether’s USDT and Circle’s USDC. However, the SEC is not satisfied with this launch and goes after Ripple before it even launches.
SEC Says New Stablecoin Qualifies as Securities Offering
In April 2024, Ripple announced the launch of its own stablecoin pegged to the US dollar. This stablecoin launch comes as part of the company’s continued expansion globally as it continues to spread its wings in the payments sector.
CEO Brad Garlinghouse said the company’s reason for launching was to help combat stablecoin unpeg events over the years that have cost cryptocurrency investors billions of dollars. Although this sounds like a noble effort, the US SEC is not very pleased.
According to regulators, the stablecoin Ripple plans to launch is an unregistered cryptocurrency asset. This was made known in an amended brief filed by the SEC in its ongoing legal battle with the cryptocurrency company.
The regulator’s most recent claims link to claims that XRP, launched in 2012, qualifies as an unregistered security service. The SEC alleges that Ripple has built its business around offering unregistered securities to investors, and its latest stablecoin project falls within that scope.
“Ripple’s primary business has been the unregistered sale of XRP since 2013. “We also plan to issue new unregistered cryptocurrency assets.” Given this, it appears that regulators are trying to block Ripple ahead of its planned launch in late 2024.
Ripple’s Litigation Status
Although Ripple was able to score several partial victories against the SEC last year, including Judge Analisa Torres ruling that secondary program sales did not qualify as securities offerings, its battle with the regulator is not over yet.
It is expected that an agreement will be reached between the two sides, but even that is not easy. The SEC is demanding that the cryptocurrency company be fined $2 billion, the appropriate amount for the ‘violation’. But Ripple hit back, offering only $10 million, which regulators called a “slap on the wrist.”
Both parties are currently in the relief phase and filing briefs with supporting exhibits. Given this, Ripple CLO Stuart Alderoty believes that the nearly four-year long battle is over. “The good news is that we are closer than ever to concluding this case,” Alderoty said in an X (formerly Twitter) post.
XRP price struggles amid Ripple's battles | Source: XRPUSDT on Tradingview.com
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