News of the SEC lawsuit against Ripple has sent the price of XRP on a downward spiral, with the cryptocurrency falling by over 32% in the last 24 hours alone. Following the same, reactions were quick to come from all corners of the crypto-community, with Ripple CEO Brad Garlinghouse calling the lawsuit ‘illogical,’ claiming that XRP should not be classified as a functional equivalent of a share of stock.
Cardano Founder Charles Hoskinson was one to comment too. In a recent video, Hoskinson stated that he doesn’t believe that XRP can be considered a security under these standards and statements, based on the facts and circumstances presented by the SEC. He also pointed out that the repercussions of claiming that XRP is a security would have a far-reaching impact on the industry as the same logic would imply that every U.S holder of XRP would also be in violation of the said securities law.
Further, while this may lead to a loss in XRP’s liquidity in the United States, it wouldn’t affect the liquidity it enjoys abroad as XRP has already been approved as a currency or an alternative in other countries.
In fact, Japan-based SBI Holdings, which has long been a partner of Ripple, also issued a statement claiming,
“When valuing the fair value of Ripple shares, it is not evaluated by the value of XRP held by Ripple, but by the valuation amount at the time of fundraising or stock trading conducted by the company in the past.”
In the same statement, SBI also pointed out that more than 90% of Ripple’s customers are outside the United States and 80% of the international remittance volume recorded using the company’s solutions occur outside the United States.
This isn’t the first time Ripple is in the spotlight, with many in the past questioning the company’s purchase and sale of XRP, accusing Ripple of manipulating the price of the asset. Lawsuits of this nature usually require public disclosures on behalf of the company in question. As Hoskinson pointed out, “A lot of facts are going to come out into the open domain because of this event.”
Specifically, how much Ripple has sold, who they sold it to, their business conduct, and their internal and external statements, all would soon come to light.
Another effect that will come into play from this lawsuit is that if in fact, XRP has been a security that has been trading on the market for the past 8 years, it would further “push the burdens of due diligence” on exchanges, according to Hoskinson. The “biggest regulatory event in the history of the industry” would,
“… create more conservatism with exchanges for listing new tokens or force them to evaluate their existing portfolios more carefully.”