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Cryptocurrency company Ripple recently announced its intention to launch a stablecoin. The stablecoin project attracted the attention of the US Securities and Exchange Commission (SEC) before its release. The SEC has begun to examine Ripple’s newly announced stablecoin and in its latest application, described this stablecoin as an “unregistered crypto asset”.
Project Name to Be Announced in June
In early April, Ripple announced its plan to launch a dollar-backed cryptocurrency on the XRP Ledger and Ethereum. This development is expected to serve as a bridge between traditional finance and crypto at an “institutional level”. According to Ripple CTO David Schwartz, the project’s name will be announced in June.
However, the SEC’s reaction to this move by Ripple was harsh. The SEC argued that Ripple’s business model is almost entirely based on selling XRP to On-Demand Liquidity (ODL) customers and that a permanent injunction was necessary. This argument follows last year’s ruling by US District Court Judge Analisa Torres, who found Ripple guilty of violating securities laws by selling XRP tokens directly to institutional investors.
Penalty Discussions Continue
While the SEC emphasized the need for a deterrent penalty, Ripple proposed only a $10 million fine. However, according to the SEC, this amount does not reflect the seriousness of the violations, and they highlight that courts often apply penalties equal to the unfair gains.
Ripple’s senior lawyer, Stuart Alderoty, opposed the SEC’s stance, stating they are “closer than ever” to moving past the case. However, he added that the process is still ongoing and for some, this journey is just beginning.
While these developments occur between Ripple and the SEC, the biggest losers are undoubtedly the XRP investors. These negative developments have significantly impacted the XRP price, forcing investors to wait for a long time. As the rise in XRP’s value has not materialized, investors have faced both a loss of time and missed opportunities from price increases in other cryptocurrencies. At the time of writing, XRP was trading at $0.51.
