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What do you see to Ripple Lab's suit by the SEC

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The journey started in 201 with Ripple Lab originally founded by Jed McCaleb, Chris Larsen, and a few other angel investors. Ripple Lab was initially a financial service that provided secure payment options for people online around the world. The process was a decentralized process that allowed people to send and receive payments solving so many problems such as the commission for currency exchange, and speed of transacting.

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Soon XRP came into being and was introduced by Ripple Lab but first, Ripple Lab is a private company while the coin XRP is a decentralized, independent cryptocurrency. Although Ripple Lab is still in the business of transferring money from one country to another and it is still quite expensive, the company could use the decentralized XRP token which is owned by no one to facilitate the transfer, making it easier and faster to reach its destination. With Ripple Labs partnership and the use of XRP, the company moved up to $30M in one week from the US to Mexico.

But then, the SEC came in. was XRP a security or a currency? BTC and ETH have been no doubt classified as a security in several countries including Nigeria but then what about XRP and the US SEC? What was the SEC's concern about XRP?

"We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, - SEC

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Unlike other securities which are being mined, XRp was pre-mined by Ripple Lab and it has 100B XRP was created which means that people do not mine XRP and Ripple Lab hold 48% of those tokens to control the market movement (let's say it stood as an escrow) also, the company hold 6B XRP for team members meaning that team members could perform tasks in return for XRP and also investors could purchase XRP from Ripple, thereby allowing Ripple lab to raise funds, making XRP security instead of a currency. XRP defended itself and proved that it is a currency and not a security and a lot of experts also attacked the SEC for taking actions they did not fully understand well. Ripple Lab says that it does not have unlimited access to the 48% tokens in its coffers so it is in no way using XRP as a security.

Although, the fight against XRP is still very unclear to so many people, and although the coin seems to be doing well now even though it has lost most of its value, it might stand strong again in the near future but do you think other cryptocurrencies will not face SEC suits soon or is the SEC still finding it hard to understand cryptocurrency.



Reference

https://cointelegraph.com/ripple-101/what-is-ripple https://www.sec.gov/news/press-release/2020-338