Ripple has had a hard time defending assertions that its token XRP constitutes a security. This dodgy matter has trailed the crypto for the better part of 2018, with the US Securities and Exchanges Commission (SEC), expected to make pronouncements on it.
It is even harder, with the average investor unable to distinguish the cryptocurrency ripple (XRP) that shares a name with the company Ripple. One thing that continues to elude most people is the fact that ripples (XRP) and Ripple (the company) are two distinct and entirely independent entities. While it’s undisputed that the company created the cryptocurrency, the latter is a distributed ledger, not tied in any way to the company that provides blockchain solutions for businesses and financial institutions.
The lack of clarity has even drawn in the SEC, which is expected to give directions over the same. The constant speculation about what the SEC would determine it to have largely led to questions concerning the coin’s future.
Will wrong with Ripple?
Ripple (XRP), that is native to the XRP Ledger continues to baffle as to why its value and price performances never correspond to its definite growth off the market. The huge numbers of high-profile partnerships and positive news have failed to push the XRP prices higher. The reason is likely the negative image that is associated with the token, despite it being one of the most promising cryptocurrencies.
Class action lawsuits
Ripple was hit with a class-action lawsuit earlier in the year. That matter came hot on the heels of the company suffering another blow in a case involving it and R3 HoldCo, over the XRP token. While those two are yet to conclude, the bad times seemed to continue. Though not immediately clear, these issues continue to negatively impact the XRP token and those that may feel the heat are the holders.
Another class-action lawsuit was recently filed against Ripple and its CEO Brad Garlinghouse. This second lawsuit wants Ripple (XRP) declared a security by the courts under California laws.
The complainant, Vladi Zakinov, contends that XRP is actually a security even if the team behind it denies it is. His main point is that the token has been sold to the public and proceeds used to further the company’s expansion. It is akin to the earlier lawsuit by Ryan Coffey that called the process a “never-ending ICO”.
The suit alleges that the XRP investment is at substantial risk of collapse as the plaintiffs are powerless in controlling its success.
According to the lawsuit, Ripple Labs’ largest source of revenue is the sale of the XRP tokens to the public. It also has continuously promoted the value of the token to the public with the intention of driving up value to make more profits. Moreover, the lawsuit alleges that Ripple uses XRP to fund its operations and promote the network.
Ripple in the spotlight again
The latest class action lawsuit puts Ripple in the spotlight once again. Ripple has maintained that the allegations concerning it are false and that its “ready to fight this opportunistic suit in an appropriate federal court.” The reports carried in Coindesk a while ago also indicate that the team behind that crypto is “confident that the claims regarding XRP are completely unfounded both in law and fact”
The end to this matter may likely be a matter of the courts to determine and the SEC to make its own determination. If the unexpected happens, then the bad times may not be over for the crypto. At the moment, Ripple is understood to have the determination to prove everything as unfounded both in law and in facts.
What may help Ripple is the understanding that two of its representatives are former employees of the SEC. The two is Mary Jo White and Andrew Ceresney, who worked for the regulatory body between 2013 and 2017. It’s going to be interesting to find out what the two bring to the table in defense of XRP and Ripple.
Will this end? Most definitely it will, hopefully sooner rather than later. The regulatory bodies may be forced to act in the wake of these lawsuits. What isn’t clear is what the decision will be and how that impacts Ripple. At the moment, XRP will continue to struggle with a confluence of bearish momentum and negative news. Its prices have dropped by 13% over the last 7 days to trade at $0.59 to the USD.