{"id":452874,"date":"2020-12-22T20:00:44","date_gmt":"2020-12-22T20:00:44","guid":{"rendered":"https:\/\/uniquehot.com\/?p=452874"},"modified":"2024-06-11T07:57:03","modified_gmt":"2024-06-11T07:57:03","slug":"ripple-effect-what-the-xrp-sec-lawsuit-says-to-new-crypto-projects","status":"publish","type":"post","link":"https:\/\/uniquehot.com\/news\/ripple\/ripple-effect-what-the-xrp-sec-lawsuit-says-to-new-crypto-projects\/","title":{"rendered":"Ripple Effect: What The XRP SEC Lawsuit Says To New Crypto Projects"},"content":{"rendered":"

Last night, Ripple CEO Brad Garlinghouse revealed his company’s expectations that they would be slapped with a lawsuit from the United States Securities and Exchange Commission in relation to the XRP cryptocurrency token<\/a>.<\/p>\n

Word spread throughout the crypto community quickly, causing widespread speculation over what this could mean for the greater industry, Ripple executives, and other projects. Here’s what the alleged SEC lawsuit says to new crypto projects considering launching under the increased regulatory scrutiny that’s clearly coming.<\/p>\n

Ripple CEO Reveals SEC’s Plan To Sue Company Over XRP Token Sales<\/h2>\n

When Bitcoin was created<\/a>, its primary goal was to act as the first fully decentralized, non-sovereign digital currency. The concept worked so well in execution, an entire industry was birthed in its blockchain-based image.<\/p>\n

Several other spinoffs like Litecoin were built<\/a>, and new protocols were created that capitalized on the blockchain technology Bitcoin brought with it.<\/p>\n

Ethereum and XRP were among the two early coins created that differ greatly from the first-ever cryptocurrency, giving each of them a unique use case and value proposition. It has allowed these tokens to become the top-ranked altcoins<\/a> in the number two and number three spots in the top ten cryptocurrencies by market cap, respectively.<\/p>\n

The use case and target audience isn’t the only way these assets differ, there’s also a large discrepancy in distribution<\/a> and decentralization.<\/p>\n

If an asset is sufficiently decentralized \u2013 for example, Bitcoin \u2013 it is considered a commodity and falls under CFTC jurisdiction<\/a>. If a crypto project launches and a share of the tokens are held by founders and executives related to the cryptocurrency, then there’s a strong possibility that it could be deemed a security under the SEC’s Howey Test<\/a>.<\/p>\n

According to Brad Garlinghouse<\/a>, Ripple CEO, the SEC is ready to slap the firm with a lawsuit related to selling unregistered securities: the company’s XRP token. The case, when it becomes public knowledge, will be a pivotal moment for the cryptocurrency industry, and it could shape how crypto projects launch in the future.<\/p>\n

$\"xrp$ <\/p>\n

The altcoin will remain bullish despite the lawsuit if support can hold | Source: XRPUSD on TradingView.com<\/a><\/pre>\nWhat Scrutiny Over The Altcoin Deemed Security Could Mean For Future Crypto Projects<\/h2>\nWhen Ripple Labs first created XRP, there was next to zero guidance from any financial regulatory entity on how to go about it. Over time as the young industry has developed, we’ve learned how Bitcoin and Ethereum are considered commodities and the coins themselves are free from any SEC-related jurisdiction<\/a>.<\/p>\n
Moving forward, the outcome of this case and the fact that the lawsuit happens at all could forever change how crypto projects are launched.<\/p>\n
\nWhat the $XRP<\/a> lawsuit is saying to new projects:
1.) Company that starts a project cannot be the majority holder of the coin (Keep \ud83d\udc40s on projects with large pre-mines)
2.) Coins need to have a "fair launch".
3.) If your coins is POW and has no pre-mine it's not a security pic.twitter.com\/7L6aINXU5i<\/a><\/p>\n
— MeanHash \u20bf \u272a (@MeanHash) December 22, 2020<\/a><\/p><\/blockquote>\n