World’s 3rd largest cryptocurrency crashes after lawsuit

San Francisco, Dec 25 : The value of XRP, worlds third largest cryptocurrency after Bitcoin and Ethereum, crashed more than 40 per cent after the US Securities and Exchange Commission (SEC) sued both the founder and current CEO of tech company Ripple for raising more than $1.3 billion through an “unregistered securities offering” after selling their cryptocurrency XRP.

According to CoinMarketCap, the XRP’s declined more than 42 per cent in the past 24 hours and was down more than 63 per cent from its 30-day high of $0.76.

It now sits at just $0.27.

The lawsuit which said that XRO is a security not currency, claimed that Ripple’s former CEO and founder Christian Larsen and its current CEO Bradley Garlinghouse violated securities laws by selling XRP over a seven-year period starting in 2013.

According to the company, “The SEC is completely wrong on the facts and law and we are confident we will ultimately prevail before a neutral fact-finder”.

“XRP, the third largest virtual currency with billions of dollars in trading every day, is a currency like the SEC has deemed Bitcoin and Ether, and is not an investment contract,” Ripple argued in a blog post.

The company said that the other major branches of the US government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency.

“Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.” Michael Kellogg, Kellogg, Hansen, Todd, Figel & Frederick

Garlinghouse said that “although the SEC’s decision brings an even greater sense of urgency to our decision whether to move our HQ outside the US, we also look forward to working with the new Biden administration to see if we can find a rational path forward here”.

The SEC in the past had ruled that Bitcoin and Ethereum are currencies.

XRP, however, differs from Bitcoin and Ethereum as the rest of the two cryptocurrencies are created through a “mining” process which is ongoing.

“Ripple started XRP by creating 100 billion units all at once” and this may be why the US SEC has called it a security, not a currency.

Ripple was recently valued at $10 billion following a $200 million funding round.

Disclaimer: This story is auto-generated from IANS service.