Why SEC Sued Ripple Labs? Unfolding The Real Reason


In late 2020, the SEC filed a lawsuit against Ripple Labs, alleging that the company had violated federal securities laws by selling XRP, which the SEC considered to be a security, without registering it as such. The case is ongoing, and it is not yet clear how or when it will be resolved.

Charles Gasparino, a journalist, blogger, and member of the Fox Business panel, provided the “autopsy” of the SEC regulator’s protracted case against blockchain behemoth Ripple. Gasparino believes he has discovered the “real reason” as to why the securities regulator has been insistent in charging the crypto giant for selling XRP tokens as unregistered securities.

The real reason behind Ripple Vs. SEC

In a recent tweet, Charles Gasparino stated that this case may help to elucidate why the regulatory agency was interested in Ripple in the first place. He stated that the SEC believed that Ripple was flouting its authority because the crypto company continued to sell XRP tokens despite SEC warnings to stop.

He also brought up the case of Ethereum, which was categorized as a commodity like Bitcoin, stating, “Ethereum did possibly one sale and stopped. No case.”  He also assured his followers that he is not taking sides in the Ripple-SEC legal dispute, but is only reporting as to why the case originated in the first place.

Stuart Alderoty and John Deaton react

Stuart Alderoty, the general counsel of Ripple, intervened to respond to Gasparino. He remarked that even if the journalist’s rationale is correct, the SEC is still acting as if they have unrestricted ability to discriminate and punish people who do not mindlessly obey them. 

He continued, “We have crossed from regulation by enforcement to hubris most foul.”

John Deaton also chimed in on Alderoty’s tweet. The SEC, according to Deaton, has caused them “maximum pain” despite purporting to protect investors, in this particular case, the XRP holders. This is a viewpoint that the XRP army has frequently expressed.

These individuals, he went on to say, had nothing to do with “Ripple allegedly flaunting the SEC’s authority,” he stated in the tweet.

In a nutshell…

Several prominent individuals who are aware of the lawsuit believe that the SEC has ulterior motives in pursuing Ripple. According to Charles Gasparino, the SEC believed that Ripple was violating its orders by selling XRP tokens in defiance of warnings.

Alderoty continues by pointing out how it is unfair of the SEC to punish those who don’t follow them blindly. John Deaton has also voiced his opinion, claiming that the SEC is inflicting misery on the individuals it was created to protect.

It is interesting to note that despite the lawsuit XRP was in the top 3 by market cap between 2015-2020 and has remained in the Top 10 after being called an unregistered security by the SEC.

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