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Ripple has run into problems once again with the United States Securities and Exchange Commission (SEC) following the announcement of its highly anticipated stablecoin. The stablecoin, which is to be pegged to the US dollar, is expected to give established stablecoins such as Tether’s USDT and Circle’s USDC a run for their money. However, the SEC is less than pleased with this launch, going after Ripple before it even launches.
SEC Says New Stablecoin Qualifies As Securities Offering
In April 2024, Ripple announced that it is launching its very own stablecoin that will be pegged to the US dollar. This stablecoin launch came as part of the company’s continuous expansion worldwide, as it continues to spread its wings in the payments sector.
CEO Brad Garlinghouse had revealed that the company’s reasoning behind the launch was to help combat the de-pegging events in stablecoins through the years that have cost crypto investors billions. While this sounds like a noble endeavor, the US SEC is less than pleased.
According to the regulator, the stablecoin which Ripple plans to launch qualifies as an unregistered crypto asset. This was made known in a redacted brief filed by the SEC in the ongoing legal battle with the crypto firm.
The regulator’s most recent allegations tie back into its claims that XRP, which was launched in 2012, qualifies as an unregistered security offering. The SEC argues that Ripple has built its business on offering unregistered securities to investors, and its latest stablecoin project falls under that umbrella as well.
“Ripple’s primary business continues to be, as it has been since 2013, unregistered sales of XRP. It also plans to issue a new unregistered crypto asset,” the filing read. Given this, it seems the regulator is trying to stop Ripple ahead of launch, which is scheduled to happen toward the end of 2024.
The State Of Ripple’s Lawsuit
Even though Ripple has been able to secure a number of partial victories against the SEC in the last year, such as Judge Analisa Torres ruling that secondary programmatic sales did not qualify as a securities offering, its battle with the regulator is far from over.
A settlement is expected between both parties, but even that is proving to be a challenge. The SEC is demanding a $2 billion fine to be levied against the crypto firm as an appropriate amount for the ‘violations.’ However, Ripple has fired back against this, offering only $10 million, which the regulator has called a “slap on the wrist”.
Both parties are currently in the remedies stage, filing their briefs along with their supporting exhibits. Given this, Ripple CLO Stuart Alderoty believes that the almost 4-year long battle is coming to an end. “The good news is that we are closer than ever to putting this lawsuit behind us,” Alderoty stated in an X (formerly Twitter) post.
Featured image from Thecryptoalert, chart from Tradingview.com
