A day after leading U.S. cryptocurrency exchange Coinbase announced it will suspend trading in XRP because of a Securities and Exchange Commission lawsuit against Ripple, the international payments firm downplayed the importance of the leading U.S. cryptocurrency exchange’s action.
On Dec. 22, the SEC sued Ripple, calling its sale of $1.38 billion in XRP an illegal “unregistered, ongoing digital asset securities offering.”
If upheld in court, that would make it illegal for exchanges to trade XRP without an SEC-issued broker-dealer license. Coinbase’s action was essentially inevitable, given that it recently filed paperwork to go public with a stock sale via an initial public offering (IPO), which the SEC must sign off on.
After repeating its accusation that the SEC’s action “is an attack on the entire crypto industry,” Ripple noted in a Dec. 29 statement—without mentioning Coinbase by name—that the “majority of our customers aren’t in the U.S. and overall XRP volume is largely traded outside of the U.S.”
It added that there “are clear rules of the road for using XRP in the UK, Japan, Switzerland and Singapore, for example.” It has been estimated that up to 97% of the XRP transactions take place outside the US, and those transactions would not be affected by any SEC decision.
Still, the case has the potential to be life or death for Ripple. For one thing, the SEC is trying to claw back every dime the company made selling XRP. For another, Ripple’s On-Demand Liquidity (ODL) product, which uses XRP to allow banks to bypass the long and costly existing system of transferring money internationally, relies on strong liquidity.
Later the same day that Ripple released its statement, the exchange Crypto.com announced that it will also delist XRP, with trading and XRP deposits suspended at 5 a.m. ET on Jan. 19, joining OKcoin and several smaller exchanges.
Coming out swinging
While repeating its promise to vigorously fight the SEC in court, Ripple added that it “will continue to operate and support all products and customers in the U.S. and globally.”
The statement also referred indirectly to the impact the SEC lawsuit has had on the price of XRP, which is down 50% since the SEC suit was announced. It is impossible not to notice that the SEC—whose mission is to protect American investors—has taken an action that has decreased the net worth of hundreds of thousands of Americans who hold XRP.
Pointing to its claim that the SEC’s refusal to lay out clear regulations about what makes cryptocurrencies a security is “dangerous,” Ripple said the “SEC has introduced more uncertainty into the market, actively harming the community they’re supposed to protect.”
Ripple also pointed—again indirectly—to its complaint that former SEC Chairman Jay Clayton rushed the suit forward, filing it a single day before he stepped down.
In what it called a “parallel note” at the end of its statement, Ripple said it was looking “forward to working with all of the Commissioners and the SEC’s new leadership, once appointed.”
Noting that the agency’s chairman, general counsel, chief economist and six division directors have left the SEC—several in the last week—Ripple said that its “steadfast commitment to constructive regulatory engagement has not changed.”
Updated Dec. 29, 4:30 pm to add news of Crypto.com.