The SEC contests that Ripple’s digital coin counts as a security and, as such, the SEC is allowed to regulate it. According to the SEC, Ripple had misled investors by selling over $1 billion without registering with the agency.
Ripple says that’s not the case, as XRP is instead a medium of exchange, a virtual coin used in order to conduct both international and domestic transactions.
It moves value between jurisdictions and facilitating transactions, and so the company says the SEC doesn’t have the right to treat it as a security.
Ripple says XRP is a fast, scalable asset and works ideally for payment processing.
Ripple alleges that the SEC’s move “amounts to picking winners and losers” in the field, as fellow cryptocurrencies like bitcoin and Ether have not been subjected to such regulations. The move also “threatens U.S. competitiveness and innovation,” according to the SEC filing, particularly as the U.S. is still facing concerns over Chinese efforts to control bitcoin and take control of the global payments markets.
Ripple has also recently faced another lawsuit from an investor over its troubles with the SEC. Tetragon Financial Group has sued the company in the wake of the SEC suit, saying it wanted to force Ripple to redeem Series C stock, and also to block Ripple from using any cash or other liquid assets until a payment is made. Tetragon also wanted a restraining order, a preliminary injunction and a quick trial.
Coinbase stopped selling XRP earlier this year after the SEC suit came down.
There was also a class action lawsuit against Coinbase claiming it knew the coins qualified as securities and thus owed commissions on XRP trades.