The settlement requires Ripple to notify the SEC prior to issuing any cryptocurrencies or digital tokens in the future.
Aziz Abdel-Qader | Coins (CryptoCurrency) | Thursday, 01/04/2021 | 01:19 GMT+2
Photo: Jeff Patterson
Ripple’s grand dreams are ending with a $100 million civil settlement with the SEC and a pledge to return the funds that US investors had put into its XRP token, Finance Magnates has learned.
A person familiar with the discussions confirmed the authenticity of the settlement agreement. He asked to remain anonymous because the plans were not meant to be public yet.
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The order, which Ripple consented to without admitting or denying the findings, also requires the firm to notify the SEC prior to issuing any ‘cryptocurrencies,’ ‘digital coins,’ or ‘digital tokens’ in the future.
The settlement, whose exact details are yet to be announced in a few days, ends a months long legal battle between Ripple and the SEC over its XRP token, which the regulator alleged was securities.
The argument from the US top watchdog was that Ripple didn’t follow the rules. Had it worked with the SEC instead of launching the XRP offering without any oversight, the outcome might have been different, sources added.
The decision comes after mounting legal ramifications coupled with the more aggressive stance taken by the US regulators, which ultimately made Ripple executives reconsider their crypto ambitions altogether.
Ripple had been fighting the suit since December, claiming its XRPs are utility tokens, outside the US authorities’ purview.
Ripple, the company behind the world’s fifth most valuable cryptocurrency, accused the SEC of being out of step, picking winners and losers, as well as distorting facts regarding the cryptocurrency.
Ripple’s court filing states that there are no significant differences between XRP’s function and that of Bitcoin and Ethereum. But, while the SEC recognized the two most popular digital currencies as non-securities, the agency turned around and said the opposite was true for its own token.
But after several months of back and forth, during which the cryptocurrency community speculated regarding the potential outcome of the conflict, the final scene got in line with the SEC’s determination.
“Our emergency action protected retail investors from Ripple’s attempt to flood the markets with securities sold in an unregistered offering without providing full disclosures concerning their project,” the sources quoted one of the SEC’s commissioners.
After the news of the settlement broke, the hashtag ‘RelistXRP’ is trending again on Twitter as the so-called ‘XRP Army’ publicly expressed their disappointment about the deal that effectively kills their favorite token.
The belligerent members of the XRP community said they will continue their campaign until non-US crypto exchanges, at least, take the lead and resume XRP trading.
US platforms, however, are highly unlikely to undo their decision to ditch XRP until the SEC’s official announcement clears the token’s security status, an issue that is at the heart of the complaint. Or they would do if it wasn’t April Fool’s Day.
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