(Reuters) – The U.S. Securities and Exchange Commission (SEC) on Tuesday accused Ripple, the blockchain payments company associated with cryptocurrency XRP, of leading a $ 1.3 billion unregistered securities offer.
The SEC also billed two executives from San Francisco-based Ripple for the personal gains they received from the offer.
Ripple created and sold XRP, the third largest cryptocurrency by market value.
Globally, financial regulators are still weighing how they should regulate cryptocurrencies like Bitcoin and its rivals. Future legal battles could determine whether cryptocurrencies leap from a niche to a mainstream asset.
Ripple has stated that XRP is a currency and should not be registered as an investment contract.
“The SEC is fundamentally wrong in law and in fact,” the company said Tuesday.
Beginning in 2013, former Ripple CEO Christian Larsen and current CEO Bradley Garlinghouse raised capital through the sale of digital assets as part of an unregistered offer.
The company also “distributed billions of XRP in return for non-cash consideration, such as labor and market making services,” the SEC said, adding that Larsen and Garlinghouse had personally benefited from the ‘About $ 600 million from their unrecorded XRP sales. .
Larsen and Garlinghouse criticized the agency’s “lack of a clear regulatory framework”, adding that they would fight the action.
“We are right and we will aggressively fight – and win – this battle in the courts to get clear rules of conduct for the entire industry in the United States,” Garlinghouse said in an emailed statement.
The SEC is seeking an injunction, pre-judgment restitution with interest and civil penalties from Ripple, the agency said, without specifying how many.
“Issuers seeking the benefits of a public offering, including access to retail investors, wide distribution, and a secondary trading market, should comply with federal securities laws that require registration of securities. deals unless a registration exemption applies, ”said Stephanie Avakian, director of law enforcement at the SEC said in a statement.
(Report by Katanga Johnson in Washington and Alun John in Hong Kong. Edited by Leslie Adler and Matthew Lewis.)
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