Over a decade ago, a white paper by Satoshi Nakamoto was distributed to a cryptography mailing list outlining a novel proposal for a “peer-to-peer electronic cash system” called bitcoin. This innovation spurred a new, global industry and asset class that has created hundreds of billions of dollars in value, and inspired a generation of entrepreneurs and innovators.
From the foreword
Another pro-crypto statement:
The World Economic Forum Global Future Council on Cryptocurrencies represents a broad cross-section of experts working to make cryptocurrencies useful across a wide range of use cases.
From the foreword
And one more:
Cryptocurrencies have reached a point of inevitability. We have dedicated our careers to advancing the adoption and use of cryptocurrencies because we believe they represent an enormous opportunity to grow the global digital economy and benefit consumers and businesses across the world.
From the foreword
When on reads the report, it becomes very clear that the World Economic Forum clearly believes that cryptocurrency will permeate all economic and financial transactions globally.
Leading Estonian high-tech cryptocurrency exchange service, NordikCoin, is announcing that it will start accepting customers from Asian markets. The company will first begin accepting customers in selected jurisdictions, while further expansion is expected to continue in 2021. Whilst expanding its global reach, the company itself and its day-to-day operations will continue to be domiciled in global cryptocurrency haven Tallinn, Estonia.
Bitcoin on the rise
Bitcoin has been in the limelight for over a decade now, rapidly expanding its scope of applications, and continuously rising in value. On January 8th 2021, Bitcoin hit a new milestone by surpassing $42,000 in value, proving that its popularity is steadily increasing.
To support the rise in demand, Estonian cryptocurrency exchange NordikCoin will apply its European KYC and AML rules to customers from new Asian jurisdictions, with the main focus on security and compliance. NordikCoin’s AML/KYC policy stands for Anti-Money Laundering and Know Your Customer and was designed to prevent and mitigate possible risks of money laundering and terrorism financing.
NordikCoin aims to be one of the fastest and most hassle-free ways of buying Bitcoin. The exchange supports all major credit cards, whilst crypto wallets are provided free of charge to its customers. Due to the innovative use of electronic ID solutions, users from supported jurisdictions can set up their accounts in under five minutes – after which they can start trading Bitcoin immediately. The company is known for bringing innovation into the cryptocurrency space, being one of the first Bitcoin exchanges with Lightning Network protocol support.
Inevitably, one of NordikCoin’s main priorities has been to follow all the latest cybersecurity standards and best practices, ensuring that the cryptocurrency exchange environment is safe and reliable for all users across the globe. This is, in part, due to the fact that the team behind NordikCoin is comprised of experienced lawyers, auditors and technologists from around the world.
Japan next for rapid expansion
One jurisdiction which is being considered for NordikCoin’s Asian expansion is Japan. The country has witnessed a notable surge in Bitcoin holdings by 11%, suggesting that it’s the perfect launchpad. Several crypto exchanges are already present and thriving in the Japanese market, regardless of current COVID-19 restrictions and difficulties. Key exchanges include Okcoin, Bitflyer, Bitbank and Btcbox, among others.
David De Marco, CEO of Omni Matrix Ltd, the parent company of NordikCoin.com, shares his excitement for the Asian expansion plans:
– Our expansion into the Asian market marks a unique opportunity for the company to present its innovative cryptocurrency trading services globally. We are thrilled to announce that we will be expanding our customer onboarding processes to facilitate clients from Asian markets. We are confident that this is the perfect stepping stone for the new era of cryptocurrency exchange with NordikCoin leading the way.
Asia has been dominating the cryptocurrency market in the past couple of years, with financial giant SBI taking a lead. The company made a series of crypto moves recently including a planned 2022 launch of a digital exchange with Switzerland’s SIX, a partnership with Ripple and, most recently, the acquisition of U.K.-based cryptocurrency trading firm B2C2. Asia has been found to adopt blockchain technology much faster than many Western countries, incorporating innovations quickly and efficiently. NordikCoin’s expansion plans seem to be a great way for Europe and Asia to join forces and increase efforts of pushing Bitcoin and cryptocurrency into the limelight.
Crypto Rating – XLM $0.69 Crypto Rating, an esteemed authority and providing realistic price predictions on various cryptocurrency assets, has given XLM a price forecast of just $0.46 within a year, and in the next five years expects Stellar to reach a price target of $0.69. Given past performance, these estimates are modest.
The Economy Forecast Agency – XLM $0.64 The Economy Forecast Agency uses a long-term forecasting valuation model to predict prices of various assets, including cryptocurrencies, projects Stellar Lumens growth to reach just $0.64, matching the sentiment of many of the other experts and analysts listed.
Long Forecast Stellar Prediction – $0.30 Long Forecast gave an entirely conservative prediction, as their stellar price prediction forecasts that XLM might reach $0.30, which make sit look like it won’t grow much as compared to the current price.
Wallet Investor XLM Price Prediction – XLM $1.05 Wallet Investor updates prices and predictions every three minutes using the latest technical analysis. They have very conservatively made a 5-Year forecast of $1.005.
Mega Crypto Price – XLM $5.10 The price forecast at Mega Crypto Price has been very optimistic for all the cryptocurrencies and its the same for XLM price forecast, too, predicting that Stellar could be worth $5.10 by the end of 2020. The team says that this can be achieved as long as there are no major security flaws and the overall sector performs well.
Monetize Info – XLM $3.00 Monetize believes that Stellar’s major partnerships will be the major reason behind an upcoming price surge, which might result in XLM’s price reaching $2-$3 by 2020. Beyond IBM, Stellar’s partners include Stripe, Deloitte, etc.
For example, Stripe gave Stellar a 3-million-dollar capital injection a few years back which Stellar immediately returned in XLM.
The Economy Forecast Agency – XLM $0.64 This website features a long-range forecasting model to make market forecasts for corporate clients. The website has its own price prediction for 2020, which says XLM will see a high of $0.64 in 2020, which is by far the most conservative and pessimistic of XLM’s price predictions.
There are other popular websites that share predictions for the price of Stellar Lumens, however, the forecasts are rather outdated and have already proven inaccurate. For instance, cryptonewsz.com predicts:
The predicted high for 2021 might be around $0.089 and on the downside, the low might be around $0.065.
As of press time, January 20, 2021, and at last check the current price of XLM is just a tad under $0.29. Stellar Lumens has already tripled the yearly high predicted by cryptonewsz.com.
A Summary of Stellar Lumens Predictions
The above Stellar Lumens price predictions for 2021 range from a low of $0.10 to the highest XLM forecast price of $5.10.
Our Analysis suggests that all of the above 11 XLM predictions are too low.
It is our conviction that 2021 is the year in which the next 4 year cycle top is due. The first 4 year cycle top arrive in 2013, and the second 4 year cycle top arrived in 2017.
XLM To Surge For 4 Year Cycle High In 2021
Bitcoin is the only coin that we have data for both 4 year cycle tops. To calculate our Ethereum price prediction for 2021 we only had data from one 4 year cycle top. We reported that, “Ethereum went up by a factor between 89x and 173x during 2017 for the last 4 year cycle top.”
We use previous price performance as a guide to possible future price performance. Of course, it’s no guarantee, only a guide.
So what was Stellar Lumens’ price performance in 2017?
Stellar Lumens In The Previous 4 Year Cycle High
On January 1, 2017, XLM was priced at one-fourth of a cent, $0.0025. It ended the year at 36 cents, $0.36. However, it did reach an all time high 4 days later at over 93 cents.
Depending on whether you’re looking at the highest price reached on January 4, or whether you’re looking at the end of the year price 4 days prior, XLM went up in price between 144x and 372x.
We do not expect XLM to increase by the same amount. Bitcoin’s 2nd four year cycle saw gains much less than its first, and we expect Stellar Lumens to do the same.
All factors considered, including the macro financial climate, the new crypto-friendly administration in the U.S., and the 4 year cycle, we are expecting XLM to go up in price by a factor between 29x and 74x.
Stellar Lumens started this year at a price just shy of $0.13. Thus, are target high price for XLM at year end is between $3.77 and $10.01.
Stellar Lumens at $10.01 in 2021
We believe the conditions favor a very strong crypto bull run in 2021, and thus we are going to base our Stellar Lumens price prediction on the high side of the range and forecast an end of the year price target for XLM to be $10.01.
What Is Stellar?
Stellar is an open source, decentralized protocol for digital currency to fiat money transfers which allows cross-border transactions between any pair of currencies. The Stellar protocol is supported by a Delaware nonprofit corporation, the Stellar Development Foundation, though this organization does not enjoy 501(c)(3) tax-exempt status with the IRS.
Stellar is an open-source protocol for exchanging money or tokens using the Stellar Consensus Protocol. The platform’s source code is hosted on GitHub.
Servers run a software implementation of the protocol, and use the Internet to connect to and communicate with other Stellar servers. Each server stores a ledger of all the accounts in the network. 3 nodes are operated by the Stellar Development Foundation, in conjunction with 21 other organizations, providing for a total of 66 validator nodes. Transactions among accounts occur not through mining but rather through a consensus process among accounts in quorum slice. The current network fee is 100 stroops, equivalent to 0.00001 XLM or 1/10,000th of a cent.
History of Stellar
In 2014, Jed McCaleb, founder of Mt. Gox and co-founder of Ripple, launched the network system Stellar with former lawyer Joyce Kim. Before the official launch, McCaleb formed a website called “Secret Bitcoin Project” seeking alpha testers. The nonprofit Stellar Development Foundation was created in collaboration with Stripe CEO Patrick Collison and the project officially launched that July. Stellar received $3 million in seed funding from Stripe. Stellar was released as a decentralized payment network and protocol with a native currency, stellar. At its launch, the network had 100 billion stellars. 25 percent of those would be given to other non-profits working toward financial inclusion. Stripe received 2 percent or 2 billion of the initial stellars in return for its seed investment. The cryptocurrency, originally known as stellar, was later called Lumens or XLM. In August 2014, Mercado Bitcoin, the first Brazilian bitcoin exchange, announced it would be using the Stellar network. By January 2015, Stellar had approximately 3 million registered user accounts on its platform and its market cap was almost $15 million.
The Stellar Development Foundation released an upgraded protocol with a new consensus algorithm in April 2015 which went live in November 2015. The new algorithm used SCP, a cryptocurrency protocol created by Stanford professor David Mazières.
Lightyear.io, a for-profit entity of Stellar, launched in May 2017 as the commercial arm of the company. In September 2017, Stellar announced a benefits program, part of its Stellar Partnership Grant Program, which would award partners up to $2 million worth of Lumens for project development. In September 2018, Lightyear Corporation acquired Chain, Inc and the combined company was named Interstellar.
Real-world Applications of Stellar
In 2015, it was announced that Stellar was releasing an integration into Vumi, the open-sourced messaging platform of the Praekelt Foundation. Vumi uses cellphone talk time as currency using the Stellar protocol. Stellar partnered with cloud-based banking software company Oradian in April 2015 to integrate Stellar into Oradian’s banking platform to add microfinance institutions (MFIs) in Nigeria.
Deloitte announced its integration with Stellar in 2016 to build a cross-border payments application, Deloitte Digital Bank. In December 2016, it was announced that Stellar’s payment network had expanded to include Coins.ph, a mobile payments startup in the Philippines, ICICI Bank in India, African mobile payments firm Flutterwave, and French remittances company Tempo Money Transfer.
In October 2017, Stellar partnered with IBM and KlickEx to facilitate cross-border transactions in the South Pacific region. The cross-border payment system developed by IBM includes partnerships with banks in the area.
In December 2017, TechCrunch announced Stellar’s partnership with SureRemit, a Nigerian-based non-cash remittances platform.
On January 6, 2021, Ministry of Digital Transformation of Ukraine announced cooperation and partnership with Stellar in development of Ukraine digital infrastructure after which Stellar value increased by 40%.
The Ripple news of late has been very complicated for XRP supporters. XRP has been on a losing streak ever since the US SEC filed a lawsuit against it in late 2020. The coin has since lost its third spot to Tether (USDT), and then also the fourth spot within the past 24 hours. Right after a short term rebound during which it regained the fourth position it had held, XRP currently lost it once again to Polkadot (DOT).
Polkadot cost surged 37% in the past 24 hours, and DOT replaces XRP as the 4th largest coin by market cap. Polkadot has been surging for rather some time now, initially starting about December 28th. Right after reaching the cost of ten dollars in the first days of January, the coin has been trading sideways until January 10th, when it dropped back again to somewhat above eight dollars.
The drop was short lived.
Right after that, nonetheless, it began a brand new price surge which took it up by about 85% in a single week. Actually, within the last twenty four hours, the coin has gone up by 37%. The market cap of it hit $15.6 billion, while the day trading volume of it rests above $7.5 billion at the time of writing.
XRP, meanwhile, is actually trading in the red for the past 7 days, down a modest 11.7%. The coin however, has risen by 4.17 % within the last twenty four hours. The market cap of it stands at $12.9 billion at the time of writing, while the trading volume of its sank under $4.3 billion.
Huge Exchanges Began Eliminating XRP
The turn of the calendar continues to be quite chaotic for XRP. First, the SEC sued its parent company, Ripple, for offering an unregistered security. Next, the coin got delisted from a selection of exchanges, in which smaller exchanges can manage to eliminate it right away, while much larger ones, including Binance, announced that the coin was going to be delisted in mid January.
The removal of its from Binance as well as the peers is likely the reason behind a good priced dip which XRP is experiencing at this time. The coin currently sits at $0.2817, with the price tag continuing to work lower. Meanwhile, Polkadot is actually seeing an immediate rise in usability, with a few reports actually professing that Asian traders are actually making use of it to forecast the cost of Bitcoin.
Ripple’s late 2020 rise was due partly to a massive airdrop of Flare (FLR) tokens. Now, the smart contract solution is actually adding support for Litecoin (LTC). An FLR airdrop to Litecoin users is actually in the works.
XRP wallets included in the December snapshot will receive a Flare tokens (worth a great amount of money, potentially).
In a Jan. 8, 2020 tweet, Flare says that they will “reduce” the number of Flare tokens for the project’s founders by five billion. This extra will be distributed to “Litecoin participants.” The Tweet promises clarification in the coming week.
A Flare for airdrops Tokens on the Flare network, known as Spark, will be used for governance and as collateral following the expected token drop in Q2, 2021. The business plans to bring smart contracts to Ripple’s XRP. Previously, Ripple was seen as a vehicle for funds transfer, and Flare claims that Spark tokens will add value.
With this tweet, the company is actually announcing what was somewhat unexpected: that the network will support other cryptocurrencies besides XRP, namely Litecoin.
Flare received a large amount of hype and press before the December snapshot for the airdrop to XRP holders.
For what it is worth, the company is naming their FLR tokens XFLR tokens (for XRP) on their site. There can probably be LFLR tokens for Litecoin. But it may not stop there. Flare could add support for other cryptos.
The rationale for choosing to integrate with Litecoin, over some other similarly sized digital assets, may have come right down to the fact that after XRP, LTC was the next biggest asset currently with no smart contract capabilities.
The Litecoin Foundation has stated it is “very excited to see the capability of smart contracts and interoperability coming for Litecoin through Flare.”
This also opens up the possibility of more such integrations that would bring the DeFi ecosystem to all non-ETH coins in the near future.
Flare has said it may support other networks in the future, but this was given little attention. Support for, say, the Bitcoin network could have implications that are huge and give ETH a run for its money.
Smart contracts and Ethereum competition? The short version of the purpose of Flare is actually to facilitate smart contracts on protocols that don’t have them built in. Flare is backed by XRP, and the airdrop to most XRP-hodling wallets cast Flare into the spotlight.
The very last several weeks have seen insane interest in Ethereum, and as the time tested and secure smart-contract chain, that is no surprise. The #2 crypto may have new investors interested in case they feel like they “missed the boat” with Bitcoin.
But the tech backing Ethereum’s value is the smart contracts. Though there are actually lots of other similar protocols that are potential rivals (DOT, EOS), ADA, Ethereum still reigns supreme.
Nevertheless, if other networks (like XRP or LTC) could support smart contracts, that would widen their appeal. In case these protocols could be interoperable via the Flare network, that would be a coup for Spark tokens (Flare hasn’t suggested they’ve plans for this).
Maybe it was the holidays, maybe it was wishful thinking, but along the way investors developed some hope that the worst of the bad news had already hit and bid up the price of XRP in anticipation of better days ahead.
Alas, it was not to be as more bad news just crossed our desk. Binance, the world’s largest cryptocurrency exchange, has announced that it is delisting XRP trading for U.S. residents beginning on January 13, 2021.
A statement on the company’s website reads:
Effective Wednesday, January 13, 2021 at 10am EST, XRP will be delisted from Binance.US. XRP trading and deposits will be suspended.
When will XRP investors get a break from the barrage of bad news?
As to be expected, Ripple has something to say about the SEC charges.
Ripple’s CEO Brad Garlinghouse tweeted that the SEC is unjustifiably attacking crypto and blasted chairman Jay Clayton’s decision to sue his firm right before the holidays.
“Jay Clayton is taking notes from the Grinch this holiday season, leaving the actual legal work to the next administration,” Garlinghouse said, referring to the chairman’s departure at the end of Trump’s presidential tenure.
Ripple has formally responded with a 6 page statement that states:
A. The SEC’s theory, that XRP is an investment contract, is wrong on the facts, the law and the equities.
B. To prove its case amounts to an unprecedented and ill-conceived expansion of the Howey test and the SEC’s enforcement authority against digital assets.
C. The SEC’s theory that XRP is an investment contract ignores the economic reality that XRP is, and has long been, a digital asset with a fully functional ecosystem and a real use case as a bridge currency that does not rely on Ripple’s efforts for its functionality or price.
D. XRP is a currency. XRP is similar to bitcoin and ether, which the SEC has determined are not securities. 1. By alleging that Ripple’s distributions of XRP are investment contracts while maintaining that bitcoin and ether are not securities, the Commission is picking virtual currency winners and losers, destroying U.S.-based, consumer-friendly innovation in the process.
E. This case is distinguishable from the Initial Coin Offering (“ICO”) and/or Simple Agreements for Future Tokens (“SAFTs”) cases that the Commission has brought previously, which involved no developed ecosystem or established utility for the underlying asset, and where the tokens were sold directly to purchasers by the issuer based on promises of profits and ongoing efforts that were articulated in white papers and other forms.
The price of XRP crashed more than 50% this week after the SEC filed a lawsuit against Ripple — the company closely associated with XRP — along with its executives Brad Garlinghouse and Christian Larsen for selling over $1.3 billion worth of XRP to the public.
As of early morning East Coast time in the U.S., the price of XRP has jumped more than 44%, providing XRP crypto bulls with a much welcomed Christmas gift.
Bitwise Asset Management, a leading crypto fund manager since 2017, issues this release to announce that the Bitwise 10 Crypto Index Fund (OTCQX: BITW) (the “Fund”) has liquidated its position in XRP.
On Tuesday, December 22, the U.S. Securities and Exchange Commission (“SEC”) filed an action in the United States District Court for the Southern District of New York alleging, among other things, that XRP is a security subject to the registration requirements of the federal securities laws.
The Bitwise 10 Crypto Index Fund does not invest in assets that are reasonably likely to be deemed securities under federal or state securities laws. Bitwise’s decision to liquidate its position in XRP was based on consideration of new public information from the SEC’s complaint.
Prior to the sale of the asset on December 22, 2020, XRP was approximately 3.8% of the Fund. The Fund liquidated its position and reinvested the proceeds in other cryptocurrencies for its portfolio.
Bitwise is issuing this release in accordance with the disclosure obligations of OTCQX®. The Fund’s Annual Report, published to satisfy the Alternative Reporting Standard disclosure guidelines for OTCQX® and OTCQB, discloses the significant risks associated with an investment in the shares.
Investors are encouraged to read the Annual Report and carefully consider these and other risks, including the fact that if any of the assets held by the Fund are determined to be a “security” under federal or state securities laws by the Securities and Exchange Commission (“SEC”) or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for the Fund and the BITW shares.
Bitwise Asset Management is a leading provider of crypto index and beta funds. Based in San Francisco, Bitwise’s team combines expertise in technology with decades of experience in traditional asset management and indexing—coming from firms including Facebook, Google, Wealthfront, BlackRock, Fidelity, Deutsche Bank, IndexIQ, and ETF.com. Bitwise is backed by leading institutional investors and asset management executives, and is a frequent commentator on crypto in the press. It has been profiled in Institutional Investor, CNBC, Barron’s, Bloomberg, The Wall Street Journal, The New York Times, and many other leading publications. The firm is a trusted partner to financial advisors, RIAs, multifamily offices, hedge funds, and other professional investors as they navigate the crypto space.
Recently there has been an interesting development in the world of the futures and options markets; the creation of the new futures and options marketplace called the “Bitcoin Fund”. This is not your typical conventional futures broker dealer that you would deal with at your local brokerage firm. There are even a YouTube video showing the “how to get started” process that they have put together, as well as information on the dynamic nature of the market itself. As more businesses begin to explore the technology of virtual digital currency futures trading there will be those that venture into it’s very profitable business aspects.
Digital currency markets have seen some volatile action this week and during the last 24 hours following the SEC lawsuit against XRP , a number of coins shed a great deal of value. XRP itself has dropped a mind-altering 40% just in the past 24 hours. Coins like golem (GNT -19%), time new bank (TNB -17%), mossland (MOC -17%), and iot chain (ITC -16%) saw decent percentage losses as well.
At the time of publication, the entire crypto-economy is valued at $629 billion and because XRP lost so much value, bitcoin’s dominance index has risen above the 68% mark.
Just recently, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs Inc. and two of its executives. According to the U.S. regulator’s complaint, Ripple Labs “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” Since then, the price of XRP fell like a rock, losing nearly 40% during the last 24 hours of trading sessions since the SEC announcement. The XRP plunge has also tugged a number of other crypto-assets down as well during the trading sessions on December 23.
Is this the bottom of Ripple’s price crash?
The truth is that traders need to wait to see what happens. Even if the market is in its third day of declines, it may not have reached bottom yet. In the meantime, this can be used to the XRP bulls’ advantage by capitalizing on the opportunity before others do, and dollar-cost-averaging down to the final bottom. As the old saying goes, “Buy when there is blood in the streets.”
XRP has certainly been bloodied in the last 48 hours!
In the weeks leading up to the XRP price crash, many publications were predicting a fundamental change in the way that money is moved. While some of these currencies did experience significant drops in value, most experienced increases in their value from buyers eager to get a position in these currencies. Even after this panic selloff in Ripple, the trend lines for all of the other top cryptocurrencies remained highly bullish, indicating that this is a dynamic market with significant potential to move higher in the near term.
There are a number of factors that have combined to create a very volatile history for the leading currencies, and if you’re an investor looking to get in on the action, it’s important to understand how the XRP crash happened and what you can do today to maximize your profits. Among the top four currencies, ether and bitcoin are hanging on to their recent gains.
A Cryptocurrency airdrop comes in two forms – Manual and automatic. The former is meant for the general users to have a look over the way the distribution will be carried out and monitor the distribution process itself; the latter is meant for the use of experts in the field, those who know how to manipulate the distribution in order to manipulate the price change. Automated Cryptocurrency airdrops are sent to all the wallets with the help of email notifications. The first kind of distribution is called the Delayed Distribution and as the name suggests, will be sent after a short period of time. The second kind, the Post-dated Distribution will be sent to the addresses registered after the expiry day specified in the contract.
The Recent Ripple Airdrop
Essentially, Ripple is adding Flare Network, a new protocol, to the XRP ecosystem. Flare Network will bring more support to owners of XRP tokens, specifically adding decentralized finance or DeFi functionality to the XRP ledger. As part of this, Flare Network has a native token, Spark (FLR). Over the weekend, any holders of XRP tokens received free Spark tokens. And after driving XRP prices up, it appears that the SEC Ripple lawsuit is now weighing on the crypto.
Still not sure exactly what this airdrop news is all about? DeFi functionality represents cutting out the middlemen from direct purchases, loans, betting, insurance and various other types of transactions. Decentralized finance is one of the biggest appeals of the crypto space — and up until now, most DeFi applications have run on the Ethereum (CCC:ETC) platform.
Now that XRP wants to differentiate itself, many bulls will likely appreciate that through Flare Network, XRP will be able to sustain smart contracts and bridge itself to existing Ethereum applications. For Ripple then, the Spark (FLR) airdrop is a way of kick-starting an important milestone.
The Securities and Exchange Commission (SEC) has charged Ripple — the company closely associated with XRP — along with its executives Brad Garlinghouse and Christian Larsen for selling as well as the ongoing sale of over $1.3 billion worth of XRP to the public.
In the filing, the SEC charged since 2013 up to the present time, the defendants have sold over 14.6 billion XRP in return for cash or other consideration to fund Ripple’s operations.
The SEC said Ripple never filed a registration document, and, therefore, it never provided investors with information all companies that sought investment from the public regularly supplied.
The SEC lawsuit alleges that Ripple broke securities laws by selling XRP directly to consumers across exchanges. According to the complaint filed by The Alliance for Financial Innovation (AFI), Ripple acted in bad faith by not requiring users to sign a disclaimer when offering the discounted currency. Additionally, according to the complaint, Ripple instructed investors to disregard the “Ripple Statement” which is issued by the SEC when promoting the discounted currency. In addition, the complaint claims that Ripple promoted the statement on its website and in emails to customers without disclosing that the advertising was deceptive and in violation of Securities and Exchange Commission (SEC) guidelines. As a result, for lack of any express requirement that customers sign a disclaimer or other agreement, investors have reportedly been sending money to the XRP office for their own private investments. As a result, due to the lack of a disclaimer, the SEC found that Ripple broke securities laws by advertising the discounted currency and not requiring users to purchase a product as a security in advance of making a purchase.
The SEC on Wednesday formally sued Ripple, alleging that its co-founder Christian Larsen and CEO Bradley Garlinghouse “created an information vacuum” that allowed them to sell XRP into a market that only had information they chose to share.
According to the SEC’s lawsuit, the duo ignored legal advice that the cryptocurrency could be considered an investment contract and therefore was a security.
“From a financial perspective, the strategy worked,” raising at least $1.38 billion “over a years-long unregistered offering of securities,” the SEC said. “Ripple used this money to fund its operations without disclosing how it was doing so, or the full extent of its payments to others to assist in its efforts to develop a ‘use’ for XRP and maintain XRP secondary trading markets.”
Larsen and Garlinghouse both fervently have denied the SEC’s allegations, publicly arguing that XRP is a currency and should not have to be registered with the SEC as an investment contract. The company has also questioned the lawsuit’s timing – SEC Chairman Jay Clayton is soon to step down – and said the U.S. government and other regulators had previously given XRP currency status.