There is no shortage of stories of the Securities and Exchange Commission in the United States (SEC) being at loggerheads with various firms in the crypto industry. The commission has had lawsuits with Telegram and Ripple and has spent years persecuting various fraudulent schemes in the industry.
The current legal batter with Ripple has seen the commission accuse the firm of selling an unregistered security in form of its native XRP token, which Ripple has hit back against. Now, Ripple is accusing the SEC of not being consistent in its treatment of firms in the crypto industry.
Ripple Fights Back
In Ripple’s most recent court filing, they have called out the SEC for allegedly insisting on treating XRP as a security token and prosecuting Ripple for selling it, but does not do the same for other popular tokens like bitcoin and ether which operate in the same way.
Back in December 2020, the SEC sued Ripple’s co-founder Chris Larsen and Chief Executive Officer Bradley Garlinghouse for selling over $1 billion worth of XRP and misleading investors. It is also claimed that XRP is an unregistered security, which is the bone of contention between both parties.
Ripple has stated, in response, that the SEC does not have authority to regulate XRP because it is not a security but a medium of exchange and thus, does not need to be registered at all.
“The SEC’s filing, based on an overreaching legal theory, amounts to picking virtual currency winners and losers as the SEC has exempted Bitcoin and Ether from similar regulation,” Ripple said in recent court documents.
Securities and Utilities
This ongoing battle between the SEC and Ripple is indicative of a bigger issue, which is the mainstream world’s inability to properly categorize many cryptos. It is also indicative of the age-old debate as to what cryptocurrencies are and how we should treat them. The dispute is that XRP is a security while many in the industry argue that it isn’t. The same issue was had with Telegram’s TON token years ago.
As the crypto industry evolves, it is hoped that some adjustments can be attained as to what cryptos are classified as. This is sorely needed to ensure that proper laws are put in place for the industry and that lawsuits such as these can be avoided in the future.