The lawsuit filed by the US financial watchdog SEC against the cryptocurrency company Ripple has been going on for more than a year and a half. According to CEO Brad Garlinghouse, Ripple, based in San Francisco, is ready to move abroad if it loses the battle.
Moving out of the US
Garlinghouse told Axios at the Collision conference in Toronto that his company could move out of the US if the lawsuit is lost. And he’s pretty sure about this: “It’s not that we could, we will.”
https://www.youtube.com/watch?v=Af1M1-ruVIY&feature=youtu.be
Is XRP a security or not?
Ripple is embroiled in a legal battle with the SEC, which claims that the company has circumvented securities laws by selling XRP (Ripple’s cryptocurrency) to investors. The aim is to determine whether XRP is a secrurity and should therefore be covered by security legislation.
However, Ripple states that although it is a huge number of XRP tokens, the network used to handle XRP transactions is completely decentralised. XRP is used for these transactions and therefore has a different function than shares. Because of this, Ripple is confident that the lawsuit will be concluded next year, Garlinghouse also said that the lawsuit is going “extraordinarily well”.
But suppose Ripple loses, it will continue to operate outside the United States. In practice, not much will change because since the SEC launched the lawsuit in December 2020, the Ripple company has already largely operated outside the US. For example, Ripple recently opened an office in Toronto, Canada, with over 150 programmers and employees.
The lack of a bull run
You may have noticed something about the date just mentioned. Around December 2020, the bull market for cryptocurrency began. Bitcoin, Ethereum and almost every other cryptocurrency rose to great heights. It seemed like new all-time highs were reached every week. The price of XRP, on the other hand, took a heavy blow. And right after the lawsuit was announced, it also became more difficult to trade XRP because many American exchanges stopped trading the currency.
In the graph below the price of Ripple at the end of 2020. Within a few days, the price dropped and XRP was left with a third of its value.
Companies stop working with Ripple
Not only was the price of XRP hit, but the company Ripple also had to give up. Various parties stopped working with Ripple after the lawsuit became public.
Winning the case will in theory stimulate Ripple’s growth, as it will give other US-based companies the courage to cooperate again. A departure would significantly hinder the company’s overall growth, as Garlinghouse admits that the US is the world’s largest economy.
Importance for cryptocurrency
The lawsuit not only decides the fate of Ripple, but is also important for the rest of the crypto sector. At least, in the United States. The outcome may set a precedent for how the SEC will deal with other crypto companies.
