- The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple in 2020.
- The court has not yet determined the token’s regulatory status.
One of the most popular cryptocurrencies by market capitalization, XRP, is a security, according to Rep. Brad Sherman (D-CA) at a recent congressional hearing on the SEC’s Division of Enforcement. He questioned Division Director Gurbir Grewal about why the agency hadn’t taken action against trading sites that provide illegitimate assets like XRP. According to Sherman, many of these trading platforms are unlawful securities exchanges.
Court Will Decide on XRP’s Fate
The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple in December 2020, claiming that XRP is an unregistered securities. Because the lawsuit is expected to be resolved next year, the court has not yet determined the token’s regulatory status.
Mr. Stuart Alderoty of Ripple, the company’s general counsel, reacted angrily to Sherman’s recent argument that just because the suit has been filed does not mean it is a security.
“This is the pernicious effect of the SEC’s reg by enforcement approach – harming people, markets, and American innovation – with unproven allegations masquerading as regulation,” he commented. U.S. exchanges have halted XRP trading in order to stay in compliance with regulations after the lawsuit brought by the Securities and Exchange Commission (SEC).
In the cryptocurrency community, Sherman is well-known for his skepticism. He advocated for a complete ban on cryptocurrency back in 2018, saying that he preferred that individuals may purchase lottery tickets. In December, he slammed Brian Armstrong, CEO of Coinbase, for not attending a Senate hearing on cryptocurrencies.
XRP has yet to be classified as a security by U.S. authorities, according to Attorney Alderoty, who reminded Rep. Sherman that the classification is now being disputed in court. Only the courts can decide whether or not the crypto is a security.
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