The US financial watchdog SEC’s lawsuit against cryptocurrency company Ripple has been pending for more than a year and a half. According to CEO Brad Garlinghouse, Ripple, based in San Francisco, is ready to move abroad if it loses the battle.
Moving out of the US
Garlinghouse told Axios at the Collision conference in Toronto that his company might move out of the US if the lawsuit is lost. And he is pretty sure about this: “It’s not that we could, we will.”
Is XRP a security or not?
Ripple is embroiled in a legal battle with the SEC, which claims that the company has circumvented securities laws by selling XRP (Ripple’s cryptocurrency) to investors. The goal is to determine whether XRP is a ”security” and therefore should be covered by security laws.
However, Ripple states that although it has a huge number of XRP tokens, the network used to handle XRP transactions is completely decentralized. XRP is used for these transactions and therefore has a different function than shares have. Because of this, Ripple is confident that the lawsuit will be completed next year, Garlinghouse also said that the lawsuit is going “extraordinarily well.”
But suppose Ripple loses, it will continue its operations outside the United States. In practice, not much will change because since the SEC initiated the lawsuit in December 2020, the Ripple company already operated largely outside the U.S. For example, Ripple recently opened an office in Toronto, Canada, with more than 150 programmers and employees.
The lack of a bull run
Perhaps you already noticed something about the date just mentioned. Around December 2020, the bull market for cryptocurrency also began.
Bitcoin, Ethereum and virtually every other cryptocurrency rose to great heights. It seemed like new all-time highs were reached every week. The price of XRP on the other hand, actually took a severe hit. And shortly after the lawsuit was announced, it also became more difficult to trade XRP as many U.S. exchanges stopped trading the currency.
In the chart below, the price of Ripple at the end of 2020. Within a few days, the price dropped and XRP was left with a third of its value.
Companies stop collaborating with Ripple
Not only did the price of XRP take a hit, but the company Ripple also had to cave in. Several parties stopped their cooperation with Ripple after the lawsuit became public.
Winning the case will theoretically boost Ripple’s growth, as it will give other US-based companies the courage to cooperate again. A departure would significantly hinder the company’s overall growth, as Garlinghouse admits that the U.S. is the largest economy in the world.
Importance to cryptocurrency
The lawsuit not only decides the fate of Ripple, but also has significance for the rest of the crypto sector. At least, in the United States. Indeed, the outcome may set a precedent for how the SEC will deal with other crypto companies.
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