Ripple created and sold XRP, the third-biggest cryptocurrency by market value. Globally, financial regulators are still assessing how they should regulate cryptocurrencies like Bitcoin and its rivals. Future court battles could determine whether cryptocurrencies make the leap from a niche to a mainstream asset. Ripple has said XRP is a currency and does not have to be registered as an investment contract. “The SEC is fundamentally wrong as a matter of law and fact,” the company said on Tuesday.
Beginning in 2013, Ripple’s former chief executive, Christian Larsen, and its current CEO, Bradley Garlinghouse, raised capital through the sale of digital assets in an unregistered offering.
The company also “distributed billions of XRP in exchange for non-cash consideration, such as labor and market-making services,” the SEC said, adding that Larsen and Garlinghouse personally profited by approximately $600 million from their unregistered sales of XRP.
The SEC is seeking an injunction, disgorgement with prejudgment interest and civil penalties from Ripple, the agency said, without specifying how much.