As the Securities and Exchange Commission’s lawsuit against Ripple settles in, the company is seeing different reactions from partners and XRP users, with some taking off, some backing away, and some offering support.
The SEC’s Dec. 22 lawsuit accuses international payments firm Ripple and two executives of illegally selling $1.3 billion in unregistered securities in the form of the No. 4 cryptocurrency by market capitalization, XRP.
While Ripple has offered an aggressive response, promising to fight the enforcement action it calls “an assault on the entire American cryptocurrency industry and an assault on American innovation”—companies working with Ripple and XRP have had very different responses.
On Dec. 23, industry news outlet The Block reported that two major cryptocurrency trading desks, Jump Trading and Mike Novogratz’s Galaxy Digital, have stopped working with XRP. The market makers’ move could impact the liquidity of XRP, which Ripple’s On-Demand Liquidity (ODL) money transfer product relies on.
Novogratz’s only public comment so far has been a tweet saying he “won’t comment yet on what this means for $XRP,” when news of the lawsuit broke. He added, “I do find it strange that [recently departed SEC Chairman Jay] Clayton waited years to do this.”
Three small exchanges immediately delisted XRP, but none of the big ones have followed suit so far—most notably Coinbase, which needs to keep on the SEC’s good side due to its recently announced plans for a public stock offering.
While it did not walk away, one of Ripple’s most-trumpeted partners, MoneyGram, distanced itself with a cautiously worded public statement about the SEC’s lawsuit.
Saying it had not “been made aware of any negative impact to its commercial agreement with Ripple,” MoneyGram noted that it “will continue to monitor for any potential impact as developments in the lawsuit evolve.”
MoneyGram said that it still uses Ripple’s ODL to trade four currencies.
But, it noted that it does not use Ripple’s main money transfer platform, RippleNet—which does not rely on XRP—or ODL “for direct transfer of customer funds.”
MoneyGram did say that it “has continued to utilize its other traditional FX trading counterparties throughout the term of the agreement with Ripple, and is not dependent on the Ripple platform to accomplish its FX trading needs.”
More stalwart support came from Ripple’s Japanese partner SBI Holdings. After word of the SEC’s enforcement action broke, the major financial group’s president, Yoshitaka Kitao, tweeted, “SBI Holdings remains a steadfast partner to Ripple, and looks forward to expanding together in Asia.”
Noting that Japan’s Financial Services Agency, the U.S. SEC’s counterpart, has “has already made it clear that XRP is not a security,” Kitao said, “I’m optimistic that Ripple will prevail in the final ruling in the U.S.”