SEC sues Ripple and two executives for selling XRP crypto: $ 1.3 billion bond fraud

The SEC said that Ripple illegally traded XRP (XRPLX), the third largest cryptocurrency in the world, for retail customers.

According to the complaint, the president, co-founder and former CEO of Ripple, Christian Larsen, and the current CEO of the company, Bradley Garlinghouse, raised capital for the business by selling XRP in an unregistered bond offering .

Failure to register XRP sales – or to qualify for an exemption from registration – constitutes a violation of federal securities law, the SEC said.

In addition, the company would also have received services, including labor and market formation, in exchange for offering XRP. Larsen and Garlinghouse also orchestrated unrecorded personal sales worth $ 600 million, the SEC claimed.

Garlinghouse called the case “an attack on cryptography in general” in a message to employees that was posted on the company’s blog. The SEC did not want to foster innovation in the digital asset space, he added.

“The SEC is fundamentally wrong as a matter of law and in fact,” Garlinghouse told CNN. “The SEC has allowed XRP to function as a currency for more than eight years and we questioned the motivation to move this action just days before the change in management.”

As other branches of the U.S. government have designated XRP as its currency, it is outside the scope of securities law, added Ripple attorney Michael Kellogg of Kellogg, Hansen, Todd, Figel & Frederick, according to the post on blog.

In October, the CEO said in a tweet the company would move its headquarters to another country if the regulatory view on cryptocurrencies in the United States was not clarified.

“While the SEC decision brings an even greater sense of urgency to our decision to move our HQ outside the United States, we also look forward to working with the new Biden government to see if we can find a rational way here,” said Garlinghouse Ripple employees .