SEC Cripples Ripple’s Latest Stablecoin Project – Says It Qualifies As Security Offering

No other crypto firm has gone to war with the SEC as Ripple has. Unfortunately, the legal face-offs are not over yet. The SEC vs Ripple cases still continue in the courts today, and just recently, the SEC has hinted at a new possible avenue to sue the XRP issuer. 

The XRP issuer has been battling the SEC for about four years now in court. The legal battles have somewhat crippled the firm, limiting innovations and eventually hurting the growth of XRP. In response, Ripple announced its plans to launch a stablecoin, pegged to the US dollar, to compete against the larger stablecoin issuers like Tether and CENTRE – a joint venture between Coinbase and Circle. 

Ripple Labs’ attempt to launch the stablecoin has hit yet another roadblock, as the SEC says the stablecoin qualifies as an unregistered securities offering just like XRP. The company announced the Stablecoin plans last month, and since then, the regulator has not been resting. 

The SEC’s issue with Ripple Labs’ Stablecoin

The Securities and Exchange Commission continues to attack Ripple after it announced its plans for a new stablecoin project. The Stablecoin, according to Brad Garlinghouse, is meant to fight against the de-pegging events that have caused stablecoin users to lose billions. Despite this noble reason, the SEC remains adamant and thinks the XRP issuer is in the business of issuing out unregistered securities, just like it’s been doing over the years. 

“Ripple’s primary business continues to be, as it has been since 2013, unregistered sales of XRP. It also plans to issue a new unregistered crypto asset,” the filing read.

The XRP issuer has had minor wins against the SEC over the four-year court battle. As the legal warfare nears its end, despite the existing challenges. The SEC reportedly demanded a $2 billion fine from Ripple Labs; however, the defendant only offered $10 million. The SEC thinks that a significantly low amount for the XRP issuers’ alleged violations of the law.

“That certainly could be part of the solution. I think there is a certain strangeness that the SEC has kind of picked winners here: it said that Bitcoin is not a security, it said that Ether is not a security, but really everything else, I think, is kind of at risk. Particularly given what they have done in the lawsuit against Ripple. But, you know, we could do that.”

• Brad Garlinghouse, Ripple CEO

Brad said this in an interview with CNN, hinting a stablecoin solution might be the proper alternative to XRP amid SEC scrutiny. Unfortunately, the SEC has a similar view on the yet-to-launch stablecoin as well.