Ripple Labs Inc. said the Securities and Exchange Commission (SEC) is poised to file a lawsuit against the San Francisco-based cryptocurrency company over the alleged sale of unlicensed securities.
The Wall Street Journal and Fortune reported the suit is expected to name the company’s cofounder Chris Larsen and its CEO Brad Garlinghouse as defendants. The SEC refused to confirm or deny whether the lawsuit was in the works.
The news organizations said the move by the nation’s top federal regulator follows a contentious debate between the SEC and the company over whether XRP, a digital currency issued and partly managed by Ripple, is a security which must be registered with the agency.
Ripple insists XRP is currency and as a result, is not subject to oversight by the SEC.
Garlinghouse told the news services that by filing the complaint, the Trump administration is taking a parting shot at Ripple one month before Joe Biden becomes president. The president-elect may look upon the cryptocurrency industry more favorably, the reports said.
Garlinghouse said he will fight the lawsuit and criticized the SEC for its timing, days before Christmas.
“It’s not just Grinch-worthy, it’s shocking,” he told Fortune. “It’s an attack on the entire crypto industry and American innovation.”
With a market cap of $23 billion, XRP is the third-most valuable cryptocurrency. The top performers, bitcoin and Ethereum, have escaped such scrutiny because the SEC has ruled they are not securities, in part because they are decentralized and not controlled by one person or company.
Yahoo Finance! reported the price of XRP’s fell by more than 6 percent against the dollar Tuesday (Dec. 22) in response to the news.
Earlier this month, CoinDesk reported Garlinghouse has reversed his decision to leave the U.S. over uncertainty about crypto regulations. At the time, Garlinghouse said he had taken a wait-and-see approach in the wake of the November election.
“We haven’t put a strict timeline on when we’ll make a decision” on relocating, he said, according to CoinDesk. “I think I am waiting to see what dynamics change, associated with the Biden administration beginning their term in office, and I am optimistic that will actually improve where things sit for the XRP community broadly.”
The company opened an office in Dubai in November.