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ARTICLE · 28 JANUARY 2021

Causing A Ripple: SEC Files Lawsuit Alleging Unregistered Offering Of XRP

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On December 22, 2020, the SEC filed an action against Ripple Labs Inc., Christian Larsen, the company's co-founder, executive chairman of its board, and former CEO; and Bradley Garlinghouse, the company's current CEO ...

CanadaTechnology
Daniel Fuke
Daniel Fuke
Julie He
Julie He
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On December 22, 2020, the U.S. Securities and Exchange Commission ("SEC") filed an action against Ripple Labs Inc. ("Ripple"), Christian Larsen, the company's co-founder, executive chairman of its board, and former CEO; and Bradley Garlinghouse, the company's current CEO (together, the "Defendants") for conducting an unregistered securities offering with a total value of US$1.38 billion.

The Defendants have sold over 14.6 billion units of Ripple's digital asset known as "XRP" to investors in the U.S. and worldwide for cash or other considerations since the beginning of 2013.

The SEC has taken the position that XRP are "investment contracts" and therefore securities under the Securities Act of 1933. Because the Defendants did not view XRP to be a security, they did not seek to register XRP with the SEC and accordingly failed to meet the SEC's requirements for securities offerings. Similar to the previous enforcement actions against Kik Interactive Inc., the SEC

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