According to the complaint, the president, co-founder and former CEO of Ripple, Christian Larsen, and the current CEO of the company, Bradley Garlinghouse, raised capital for the business by selling XRP in an unregistered securities offering.
Failure to register XRP sales – or qualify for a registration exemption – is a violation of federal securities law, the SEC said.
In addition, the company also received services, including labor and market, in exchange for the XRP offer. Larsen and Garlinghouse also orchestrated unrecorded personal sales of $ 600 million, the SEC said.
“The SEC is fundamentally wrong legally and in fact,” Garlinghouse told CNN. “The SEC has allowed XRP to operate as a currency for more than eight years, and we question its motivation to introduce this action just days before the change of administration.”
Because other branches of the US government have designated XRP as the currency, it does not fall within the scope of securities law, Ripple’s lawyer Michael Kellogg of Kellogg, Hansen, Todd, Figel and Frederick added, according to the blog post.
“While the SEC’s decision brings an even greater sense of urgency to our decision to move our headquarters outside the United States, we look forward to working with the new Biden administration to see if we can find a rational way forward,” Garlinghouse employees told Ripple.