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| Ripple has been accused of cheating investors with using XRP |
The U.S. Securities and Exchange Commission has filed a lawsuit against cryptocurrency firm Ripple, the company's former CEO and founder (Christian Larsen) and the current CEO (Bradley Garlinghouse).
The US Securities and Exchange Commission said: It raised more than $ 1.3 billion by issuing unregistered securities.
In the lawsuit, Ripple is accused of violating securities laws by selling the XRP cryptocurrency. The Wall Street Journal claimed that it was the third largest cryptocurrency in the world by market value for the seven years of 2013.
According to the complaint, the illegal issuance of the securities led to inconsistent reports, allowing Larsen and Garlinghouse to sell XRP to investors who were not aware of the risks.
According to the lawsuit filed by the US Securities and Exchange Commission, XRP is a security, not a virtual currency. As a result, Ripple did not provide its investors with the correct information needed to assess the potential risk.
According to Garlinghouse, it is a virtual currency, which means the US Securities and Exchange Commission has nothing to do with it.
Authorities had previously determined Bitcoin and Ethereum to be digital currencies. When Ripple took legal action against her company in 2015, the Department of Justice viewed XRP as a digital currency.
XRP differs from Bitcoin and Ethereum in one important aspect, as Ripple created and sold XRP cryptocurrency, initially offering 100 billion units each.
Ripple owns about 6.4 billion XRP, Garlinghouse and Larsen also owns a large portion of it, and another 48 billion XRP for regular sale.
This difference may be the reason why the US Securities and Exchange Commission claims that XRP is more than safe than virtual currency, which means that XRP is a tradable financial asset.
The company has distributed billions of dollars in the XRP digital currency without cash, the agency said, and Larsen and Garlinghouse have generated nearly $ 600 million in unregistered XRP sales.
The agency has filed similar lawsuits against Block.one and Kik in the past, saying that the first tokens these startups issued were securities.
Garlinghouse announced that the company was originally planning to file a complaint, and Ripple issued a document informing the U.S. Securities and Exchange Commission that his actions were legal.