A U.S. lawsuit against Ripple Labs Inc., the issuer of the world’s third largest cryptocurrency, has lowered the value of the XRP currency, but Indian exchanges have failed to restrict their trading despite closely monitoring the case.
The case of the US Securities and Exchange Commission argues that XRP is more of a security than a currency. Therefore, the issuer should have obtained prior approval from the US Securities and Exchange Commission for the introduction. Ripple Labs and two of its executives have raised over $ 1.3 billion through their unregistered offering of digital asset securities.
Launched in 2013, XRP had a market cap of around $ 16 billion on December 25, about two-thirds of the $ 24 billion it was worth on December 21.
On December 22nd, the SEC filed a complaint against Ripple over an “unregistered security offering” alleging that XRP was more of a security than a currency. The issuance of securities in the United States requires SEC approval. This caused the price of Ripple to drop from 0.56 US cents on December 21st to around 0.28 cents on December 24th, a decrease of 50%. On December 25, the currency was trading at around 0.33 cents, slightly above its most recent lows.
The Indian cryptocurrency exchange was shocked by the development.
“Ripple (XRP) is one of the most popular cryptocurrencies. It was also among the most widely traded tokens on WazirX. The SEC’s lawsuit against Ripple is shocking. Given the uncertainty of this situation, we will continue to monitor process development and then take the necessary steps, “said Siddharth Menon, co-founder and chief operating officer of WazirX, India’s largest crypto exchange by volume.
Neeraj Khandelwal, Co-Founder of Crypto Exchange CoinDCX, said: “We are closely following developments and are waiting for more information on this matter before making a decision.”
Cryptocurrency professionals also differentiated between XRP and other cryptocurrencies.
“Anyone can mine cryptos like Bitcoin and Ethereum. There is no issuer or owner. This was never the case with XRP. Ripple Labs owned 98% of it and gave out a little each year. The company stopped supply (100 billion tokens). This makes it more of a security than a cryptocurrency, ”said Gaurav Dahake, CEO of Bitbns, a cryptocurrency exchange.
The lawsuit is likely to sway regulators in other countries as well, including India.