The Securities and Exchange Commission on Tuesday filed a civil suit claiming Ripple Labs Inc. violated investor-protection laws when it sold a bitcoin-like digital asset called XRP.
The suit is one of the highest-profile SEC actions against a cryptocurrency pioneer and comes just as the regulator’s chairman is departing at the end of the Trump administration. The SEC over the past few years has brought and mostly won civil lawsuits alleging startups trampled securities laws when they raised money by selling cryptocurrencies.
None of those companies, though, was as big as Ripple and XRP. Ripple had a $10 billion valuation in its most recent funding round in 2019, and XRP is the third-largest cryptocurrency by market value.
The price of XRP, which had more than doubled this year, declined after The Wall Street Journal reported the SEC suit was imminent, falling 13% to 45 cents, according to CoinDesk.
The commission charged Ripple Chief Executive Brad Garlinghouse and co-founder Chris Larsen with engaging in an illegal securities offering. In its complaint, the SEC said the defendants had sold more than 14.6 billion XRP tokens since 2013 worth $1.38 billion in an unregistered offering.