On January 29, 2021, Ripple officially responded to the SEC's complaint, arguing that XRP is not a security and accusing the regulatory agency of distorting the facts. This counter-suit led to a significant surge in the value of XRP, increasing by over 100% compared to its recent low point.
The SEC's lawsuit, filed in December 2020, claims that Ripple, its CEO Brad Garlinghouse, and co-founder Christian Larsen sold over 14.6 billion XRP, valued at least $1.38 billion, to investors without proper registration. In response to the lawsuit, several exchanges, including Coinbase, Binance, Okcoin, and Blockchain.com, have delisted XRP trading pairs.
Ripple's response argues that XRP is a digital currency, not a security, and cites examples of foreign regulatory agencies, such as those in Japan and Indonesia, that have classified it as such. Ripple also accuses the SEC of distorting the facts and suggests that the lawsuit was politically motivated to reverse the decision made during the Obama administration to classify XRP as a digital currency.
While there is ongoing controversy surrounding XRP's classification, some countries, like Japan, have recognized it as a legitimate digital token. However, in order to comply with US securities law, Ripple may need to make changes to the production process of XRP to avoid selling it as a security.
The lawsuit between Ripple and the SEC is ongoing, and it is advised that investors closely monitor the situation before investing in XRP. Despite the uncertain outcome of the dispute, Ripple is expected to maintain its position as a leading blockchain payment company.
