Crypto exchange Kraken has become the latest in a series of popular platforms to delist XRP, one of the largest digital currencies in the world.
The decision was prompted by a December lawsuit by the US Securities and Exchange Commission (SEC), against Ripple, who oversees XRP, CEO Brad Garlinghouse and Chairman Chris Larsen.
The lawsuit revolves around classifying XRP as a security (i.e. a financial asset from an investor intending to gain profits) instead of a currency or medium of exchange. The SEC claims that the sale of XRP is a violation of federal securities laws, as Ripple has failed to properly categorize its products and, by extension, provides sufficient information to investors.
“With a recent SEC filing against Ripple Labs Inc., we will suspend XRP trading for US residents no later than January 29, 2021 at 5 p.m. Pacific time,” Kraken explains. in one blog posts.
According to the company, this decision will only affect customers in the US. While they won’t be able to buy XRP anymore, Americans can still deposit, hold, or withdraw funds through Kraken’s wallet service.
The company explained that it is yet to say how long the restrictions will last. “We are monitoring the situation regarding SEC filing and will adjust to any new developments,” it added.
The XRP lawsuit
When the lawsuit was first announced, only two small US exchanges (CrossTower and Beaxy) removed XRP from the list. However, a slew of major players – such as Binance and Coinbase – followed suit, effectively rendering the cryptocurrency ineffective in the U.S. and damaging the value of existing XRP holdings.
The digital currency is currently at a valuation of just $ 0.28 per coin, down more than 50% from about $ 0.55 before the SEC’s lawsuit was announced. Cryptocurrencies fell from third to fifth largest in the world by market capitalization, overtaken by Tether and Polkadot.
For its part, Ripple insists that XRP should not be classified as a secure and it was Garlinghouse who described the lawsuit as “an attack on the entire crypto industry and US innovation”.
In company Wells submission, a document that allows defendants to respond to any lawsuits against them, Ripple stated that “the SEC theory, that XRP is an investment contract, is false about the truth, the law and the stocks. “.
“[The SEC theory] ignoring the economic fact that XRP has long been a digital asset with a fully functional ecosystem and a real use case. “