XRP Crashes Under $0.30 In a Massive Sell-off After SEC Slaps Lawsuit for Selling Unregistered Securities

Ripple’s XRP price has crashed all the way under $0.30 as part of a massive sell-off following the U.S. SEC slapping a major lawsuit against the seven-year-old blockchain firm.

The XRP price has tanked more than 50% just in a week’s time. However, making a dip of $0.21 earlier today, XRP’s price has partially recovered and is currently trading at $0.26 with a market cap of $12.2 billion.

Just a day after Ripple CEO Brad Garlinghouse said that the regulatory agency is planning to sue them, the U.S. SEC issued an official statement on Tuesday, December 22.

The agency has accused Ripple of raising $1.3 billion by selling the XRP tokens during the 2013 ICO as unregistered securities. The complaint names Ripple and its two executives - CEO Brad Garlinghouse and co-founder Chris Larsen.

The U.S. SEC said that “Larsen and Garlinghouse also effected personal unregistered sales of XRP totaling approximately $600 million”. The complaint notes that Ripple distributed billion of XRP as non-cash considerations such as labor and market-making services. It adds that Ripple failed to register their offers and sales of XRP with the SEC and thus violated the federal securities law.

Stephanie Avakian, Director of the SEC's Enforcement Division said: "We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple's business and other important long-standing protections that are fundamental to our robust public market system.”

Following the lawsuit, some of the crypto exchanges also started delisting XRP. Even Ripple’s strongest partners have started issuing statements. Ripple’s strongest partner from Japan SBI Holdings said: “The Group's investment ratio in Ripple is 8.76% in total (our direct investment 5.81%, fund investment 2.95%, all based on potential ratio). When valuing the fair value of Ripple shares, it is not evaluated by the value of XRP held by Ripple, but by the valuation amount at the time of fund raising or stock trading conducted by the company in the past. It is evaluated appropriately and conservatively, such as being done based on”.

Even payments network MoneyGram has issued a statement saying “The Company has not currently been notified or been made aware of any negative impact to its commercial agreement with Ripple but will continue to monitor for any potential impact as developments in the lawsuit evolve.”

Defending Ripple’s position in this entire case, the company’s lawyers wrote: The SEC is completely wrong on the facts and law and we are confident we will ultimately prevail before a neutral fact-finder. XRP, the third largest virtual currency with billions of dollars in trading every day, is a currency like the SEC has deemed Bitcoin and Ether, and is not an investment contract. This case bears no resemblance to the initial coin offering cases the SEC has previously brought and stretches the Howey standard beyond recognition.”