Ripple Faces SEC Heat Over Stablecoin Launch Announcement

May 8, 2024 at 02:30 PM GST updated: May 8, 2024 at 02:10 PM 2 mins read Crypto Live News

• Ripple faces SEC scrutiny over its upcoming stablecoin, labeled as an “unregistered crypto asset”.
• SEC demands a hefty penalty against Ripple for alleged securities law violations regarding XRP sales.
• XRP investors suffer amid legal battle, witnessing price impact and uncertainty in the market.

A legal dispute has been sparked by the US Securities and Exchange Commission’s (SEC) interest in Ripple’s investment into stablecoins. In its most recent action, the SEC describes Ripple’s impending stablecoin as a “unregistered crypto asset”, stepping up regulatory scrutiny.

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Ripple revealed intentions to launch a cryptocurrency backed by dollars on the Ethereum and XRP Ledger platforms earlier this year. With this project, the institutional gap between traditional finance and the cryptocurrency space will be bridged. However, the SEC responded harshly, defining Ripple’s main business strategy as mostly selling XRP to On-Demand Liquidity (ODL) customers.

This criticism is in line with a prior decision by US District Court Judge Analisa Torres, who concluded that Ripple violated securities regulations by selling XRP tokens to institutional investors straight away. In its case for a permanent injunction, the SEC emphasizes the need for a deterrence to Ripple’s activities.

Ripple has responded with a quite modest $10 million fine, which the SEC finds inadequate considering the seriousness of the violations. The regulating authority argues that Ripple’s proposal violates the concept that courts usually impose punishments commensurate with the illicit earnings.

Senior legal counsel for Ripple Stuart Alderoty said they are “closer than ever” to a settlement and voiced hope about it. He did concede, meanwhile, that the process is still ongoing and that for some parties concerned, the trip to the courts have only just begun.

The legal dispute between Ripple and the SEC, meantime, is affecting XRP investors.The unfavorable events have affected the price of XRP, trapping investors and preventing them from profiting from any increases seen in other cryptocurrencies. Currently trading at $0.52, XRP is impacted by the continuous regulatory court’s drama.

The fate of XRP is at jeopardy as Ripple works through the legal maze and the SEC tightens its hold. Investors are still cautious, waiting on clarification from the regulatory authorities and hoping for a settlement that will guide XRP into more stable waters. 

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