The US Securities and Exchange Commission (SEC) sued Ripple, along with the CEO Bradley Garlinghouse and the chairman of the board Christian Larsen, for illegal securities offering worth $1.3 billion. CNN reports that the cryptocurrency company’s CEO and chairman used an unregistered securities offering for raising capital for their business, which violates federal securities law.
In the press release from the SEC, the financial regulator’s complaint includes the claim that Ripple has been offering unregistered securities to investors. As a result of selling XRP, Ripple’s cryptocurrency, the company raised funds for their business. Moreover, they have been doing it in this way since 2013.
In addition to this complaint, the press release also outlines that Ripple allegedly exchanged XRP for non-cash value. This includes, for instance, labor services. Since the company neither registered the offering nor applied for exemption from registration, it violated the law, SEC says. The press release states that the complaint “seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties.”
This is not the first lawsuit the company is facing this year. In August, Ripple was sued by New Payments Platform Australia (NPPA) for trademark infringement. The firm was claiming that Ripple used the name of its payment service PayID. That is because their service appeared much earlier than Ripple’s platform of the same name.