In what has had an enormous ripple effect across the crypto industry, the SEC has filed a lawsuit that deems the XRP cryptocurrency token to be an unregistered security. Those on the defensive look to past instances of EOS and KIN as examples of tokens launched that barely got a slap on the wrist, paid a fine, and went on their merry ways.
However, one crypto analyst with a strong understanding of law explains exactly why this Ripple lawsuit is especially bad, and why XRP investors in the US are right to be worried.
Ripple Lawsuit: SEC Fires Shot Heard Round The Crypto Industry
This week, Ripple CEO first broke the news to the media that he was expecting a lawsuit from the United States Securities and Exchange Commission.
The crypto market took pause to digest the new information and consider the potential impact of what was to come, and then XRP plummeted once investors came to grips with the severity.
Related Reading | Ripple Lawsuit Triggers XRP Led Altcoin Apocalypse
Retail investors panic sold, and even large hedge funds based in the US have now liquidated their holdings to stay compliant with US law. The expectation is that major exchanges like Coinbase will delist the altcoin next.
It immediately caused the cryptocurrency to fall in overall market cap, bleeding billions in hours. And while the “XRP army,” analysts, and supporters came out in droves with reasons why Ripple will be fine and so will their favorite centralized cryptocurrency, there is serious risk in this situation compared to others.
A look at the aftermath of the SEC lawsuit. However, support is still holding... | Source:
Why The XRP Suit Doesn’t Compare To EOS Or KIN Cases
XRP supporters holding on to what they still can, might find comfort in knowing that the companies behind EOS and KIN tokens were able to successfully settle with the SEC, pay their fines, and move on.
Adam Cochran professional analyst and partner at Cinneamhain Ventures .
First, the SEC asserts that XRP today is still an unregistered security, while EOS and KIN tokens were only at the time of sale. They also have documentation of centralization, which is what the crypto community often disliked most about XRP.
Related Reading | Ripple Effect: What The XRP SEC Lawsuit Says To New Crypto Projects
Ripple execs Brad Garlinghouse and Chris Larsen are explicitly named in the case as liable. Cochran also says that exchanges will need to delist XRP immediately or risk being in violation of securities laws themselves. The SEC has issued a statement offering clarity around the situation, but others have added that although some leniency is being given to exchanges that have offered the token to customers thus far, it doesn’t give them the freedom to keep doing so now that XRP has been deemed a security.
Lastly, the case could drag out for years, causing XRP to suffer significantly as a result.
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