The Ripple Legal Battle: Is XRP a Security Token or Not?
According to news published by Fortune, September 20, Ripple, the company behind the cryptocurrency XRP asked a federal court to dismiss the class action that would claim XRP as security.
Security or not Security?
As informed by BTCManager in August 2019, a group of investors filed a complaint against Ripple with the Securities and Exchange Commission (SEC) for dumping illegal securities on investors with the token.
The case is very relevant as it is not just Ripple caught in the crosshairs. Although the SEC has already exonerated Bitcoin and Ethereum from securities law, this time the focus is on other cryptocurrencies which, if considered as classic financial instruments, could expose companies like Ripple to various issues.
Ripple tries to justify itself in two ways: the first is relying on the opinion already expressed by the regulators who would consider XRP as a currency or commodity.
The second is based on an issue with timing; According to Ripple, the case cannot be prosecuted because it was filed too late as the law states that a company who sold securities cannot be charged if a period longer than 3 years passed since the sale of the security.
Effectively the sale of XRP began in 2013, however, the investors claim that the sale of XRP has never ended and is still “ongoing”. In response, Ripple defends itself by saying that investors have bought Ripple from secondary markets and not directly from the company which, by the way, still owns a majority of them.
The best defense is a good offense, and it seems that this is the strategy chosen by Ripple. For some months now, Ripple and other companies in the sector have been putting pressure on Congress to get clearer rules on digital assets. Should Ripple manage to convince regulators, it is unlikely that XRP will be classified as a security in the near future.
The company has evolved considerably since its creation. Ripple places himself as a protocol that can replace SWIFT to become the standard for cross border remittance and payment services, Ripple offers its tech to the world of finance to lower transaction costs by leveraging XRP.
In respect to this service, in August 2019, PNC Treasury Management became the first U.S. bank to facilitate lightning-fast cross-border payments for clients with RippleNet.