By The U.S. Securities and Exchange Commission has not been kind to crypto in the past year. In March 2020, in the SEC v. Telegram case, the Commission won a worldwide injunction against the proposed issuance of Grams by Telegram, undoing years of innovative work even in the absence of any allegations of fraud. Then, on the last day of September 2020, Judge Alvin K. Hellerstein dashed the hopes of Kik Interactive by ruling in favor of the SECs motion for summary judgment in SEC v. Kik Interactive, halting the sale of Kin crypto tokens. Both of these actions were filed in the Southern District of New York. On Dec. 22, 2020, the SEC decided that it was time to initiate another highprofile action, filing in the same district against Ripple Labs and its initial and current CEOs, Christian Larsen and Bradly Garlinghouse, respectively, for raising more than 1.38 billion through the sale of XRP since 2013.
The initial fallout from this action has been swift and severe 24 hours after the lawsuit was filed, the price of XRP was down almost 25. This still left XRP ranked fourth on CoinMarketCap, with a total market capitalization of over 10.5 billion.
The complaint
In its complaint, the Commission paints a straightforward pattern of sales of XRP that were never registered with the SEC or made pursuant to any exemption from registration. From the perspective of the Commission, this amounts to a sustained practice of illegal sales of unregistered, nonexempt securities under Section 5…
