Digital assets manager Bitwise has liquidated $9.3 million worth of XRP and reinvested in other assets. Hong Kong’s OSL has suspended the asset from its platform. This is done in response to SEC’s lawsuit against Ripple Inc.
The US Securities and Exchange Commission (SEC) on Tuesday filed a lawsuit against Ripple Labs and CEO Brad Garlinghouse and Chairman Chris Larsen. The SEC contends that Ripple Labs was in violation of federal securities laws for selling the digital asset XRP to retail clients. According to the suit, Ripple has made $1.3B over a period of 7 years from selling XRP. All this has resulted in new measures regarding XRP introduced by different platforms, such as Bitwise.
Ripple CEO Brad Garlinghouse disclosed on Monday that the SEC had informed his firm of the then-impending lawsuit. The company also released a Wells Response, a document seeking to counter the SEC’s claims.
The Hong Kong-based announced on Wednesday that it was suspending all XRP payments and trading “until further notice”.
“As part of OSL’s rigorous compliance program, digital assets are subjected to regular due diligence reviews to assess their suitability for trading on our platform,” OSL CEO Wayne Trench said.
Please note: In light of US Securities & Exchange Commission’s enforcement action against Ripple Labs & 2 of its executives, we have suspended all #XRP payment in and trading services on the OSL platform, effective immediately and until further notice.https://t.co/EXJJEHMawn
— OSL (@osldotcom) December 23, 2020
Bitwise Liquidates Its Position in XRP
Bitwise Asset Management, in a press release, disclosed that the Bitwise 10 Crypto Index Fund (OTCQX: BITW) had liquidated its position in XRP. Earnings from the liquidation were used to invest in “other portfolio cryptocurrencies”. The statement, made available on Wednesday read in part:
“The Bitwise 10 Crypto Index Fund does not invest in assets that are reasonably likely to be deemed securities under federal or state securities laws. Bitwise’s decision to liquidate its position in XRP was based on consideration of new public information from the SEC’s complaint”
Security or Non-Security?
The SEC is by no means the first time XRP has come under scrutiny. There has been a constant debate over XRP’s status for years.
- The Crypto Rating Council, a project run by several major crypto exchanges, noted that XRP could be classified more as a security than a non-security.
- Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo opined that XRP should be “considered a currency or a medium of exchange,” as opposed to a security. He cited the Howey Test in his argument.
- The SEC maintains that XRP is a security. They quote Ripple’s 2016 application to the New York State Department of Financial Services for XRP II. In it, Ripple affirms that buyers were ‘purchasing XRP for speculative purposes’ a characteristic that makes it a security according to SEC.
The lawsuit comes at a time of major leadership changes in the US government. SEC Chairman Jay Clayton and Enforcement Director Stephanie Avakian had prior announced their plans to leave the agency at the end of the year. President Biden will have to appoint an interim Chairperson over the SEC while his preferred nominee goes through Congress confirmation. Interestingly, Garlinghouse had contributed to President-elect Joe Biden and Vice President-elect Kamala Harris’ campaigns.
Mercy Mutanya is a Tech enthusiast, Digital Marketer, Writer and IT Business Management Student.
She enjoys reading, writing, doing crosswords and binge-watching her favourite TV series.