The U.S. Securities and Exchange Commission (SEC) intends to sue Ripple over its sale of XRP, CEO Brad Garlinghouse said Monday.
According to Fortune, the lawsuit will be filed in the near future, though no specific date has been provided yet. The suit had not been filed as of press time. Ripple cofounder Chris Larsen and Garlinghouse will be named defendants alongside the firm, Garlinghouse said.
"It’s an attack on the entire crypto industry and American innovation," Brad Garlinghouse said in an emailed statement.
In an emailed statement, outside counsel Michael Kellogg, of Kellogg, Hansen, Todd, Figel & Frederick said, "This complaint is wrong as a matter of law. Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency. Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.”
Ripple received word Monday that the SEC intended to sue, according to the Wall Street Journal.
The company has previously paid $700,000 in fines on charges it violated aspects of the Bank Secrecy Act brought by the Financial Crimes Enforcement Network (FinCEN), as well as an additional $450,000 in fines to the U.S. Attorney's Office for the Northern District of California.
Garlinghouse's move Monday is reminiscent of how messaging platform Kik announced the SEC would file suit against it for raising $100 million to build Kin. Kik later settled the case.
According to Messari, Ripple has sold about $1.2 billion in XRP over the years.
XRP's price fell after news of the impending lawsuit came out, dropping 12% on the 24-hour trading period to below 50 cents. The cryptocurrency's price had already begun falling earlier in the day, joining a broader market decline.
An SEC spokesperson did not immediately return a request for comment. After the publication of this article, a Ripple spokesperson emailed the following statement, attributed to Garlinghouse:
UPDATE (Dec. 22, 2020, 02:25 UTC): Updated with additional context.
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