SEC filed a complaint against Ripple and its two executives

SEC charged Ripple and its executives with $1.3 billion unregistered securities offering
In its complaint, the SEC alleged that Ripple Labs, Inc. and its two executives Bradley Garlinghouse and Christian Larsen sold over 14.6 billion tokens called XRP from 2013 to present, for which they received over $1.38 billion dollars. During its investigation, the SEC determined that the XRP tokens meet the legal definition of securities; therefore, requiring the XRP sale to be registered with the SEC or be exempt from the registration.

Ripple never filed any registration statements. Instead, as alleged by the SEC, Ripple created an information vacuum and publicly shared information that was beneficial for Ripple, Mr. Garlinghouse and Mr. Larsen, who were the largest holders of the XRP tokens. The SEC found that Mr. Garlinghouse and Mr. Larsen personally profited by approximately $600 million from their unregistered sales of the XRP tokens, while engaging in touting, which is illegal under the U.S. securities law.

The complaint describes in details how Ripple and its executives had been violating the U.S. securities law for a number of years. The SEC’s main concern that the company and its two executives continue to hold a substantial amount of the XRP tokens and can continue to monetize their holdings while using the “information asymmetry they created in the market” for personal gain, while placing the investments of others at substantial risk.

The SEC is seeking injunctive relief, disgorgement with prejudgment interest, and civil penalties. Interesting to note that the SEC did not bring any fraud charges against the two executives.

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