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Chris Larsen

SEC Finally Drops Bombshell Lawsuit Against Ripple

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The United States Securities and Exchange Commission [SEC] has finally announced filing an action against Ripple Labs Inc. and two of its executives on the 22nd of December. Claiming the two execs, namely Christian Larsen, Ripple’s co-founder, executive chairman of its board; and Brad Garlinghouse, the company’s current CEO, as significant security holders, SEC alleged that they secured more than $1.3 billion through an unregistered, ongoing digital asset securities offering.

This news comes just a day after Ripple CEO Brad Garlinghouse warned the community about an imminent lawsuit over the blockchain firm’s sale of XRP which happens to be associated with the platform.

According to the official document, Ripple also allegedly distributed billions of XRP in cryptocurrency exchange for non-cash consideration, like labor and market-making services. Apart from structuring and promoting the XRP sales used to finance the firm’s business, both Larsen and Garlinghouse also affected personal unregistered sales of XRP totaling nearly $600 million. The complaint further alleged that the two defendants in question apparently failed to register their offers and sales of the digital asset or satisfy an exemption from registration, which was found to be a violation of the registration provisions of the federal securities laws.

Stephanie Avakian, Director of the SEC’s Enforcement Division stated,

“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”

A divided Industry

Despite Garlinghouse’s claim that Ripple is not only on the right side of the law but also on the right side of history, there are many in the community who would contradict.

Clearly, the cryptocurrency industry was probably never as divided as it is currently. As the news of the lawsuit broke on Tuesday, several prominent personalities of the crypto industry went on to share their opinion on Twitter. While there were some who sympathized with Ripple and the executives and called out the agency for its stance on the matter, there were many advocates of the space who sided with SEC’s latest move.

Co-founder of Morgan Creek Digital, Anthony Pompliano, for one, made his lenience quite clear with the following tweet:

“Good morning to everyone except the people who thought they could sell unregistered securities and get away with it”

Pompliano argued that he listened to their opinion but lost when “they openly became enemies of Bitcoin and the decentralization movement”. This could be attributed to an official release in which Ripple had earlier claimed that Bitcoin and Ethereum were “Chinese-controlled”. This did not sit well with, Ethereum co-founder, Vitalik Buterin as well, who lashed out at the firm in the following tweet:

Interestingly, Messari’s Ryan Selkis also took a jibe at Ripple’s popular mantra “we’re all in this together” and said that the “bad limb” needs to be amputated.

Ripple’s Former And Current CEO Reveal Plans To Exit US Over Regulatory Climate

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Decentralization is what the crypto industry hoards. Nevertheless, the crypto-verse continues to fall under the purview of many regulators across the world. Although cryptocurrencies have a ton to offer when it comes to digitization, the risks pertaining to them also follow. As a result, some regulators have had a difficult time scrutinizing these assets. However, the lack of regulatory clarity appears to be a big problem for Ripple.

Is US A No-Go For Ripple?

Appearing in a recent interview, the former CEO of Ripple, Chris Larsen hinted that the blockchain-based payment protocol was considering exiting the United States following the severe regulatory implications put forth by the country’s regulators. Currently based in California, Ripple has been seeking better clarity on the regulatory climate of Ripple in the country.

Pointing out how the US limits crypto platforms from operating globally, Larsen highlighted that Ripple was looking to relocate its headquarters from San Francisco. He said,

“We don’t know how it’s going to exactly play out, You know, those countries are trying to sort of become fintech centers of the world. You have clarity in places like Switzerland, the U.K., Singapore, Japan.”

He also added that the above-mentioned countries would have the upper hand as they would harbor capital markets, regulators as well as innovators in the same city, unlike the United States. In the United States, New York is where investors can be found, Washington has lawmakers, and Silicon Valley has tech entrepreneurs, and none of them can understand each other, he added.

Seconding Chris Larsen’s take on the hostile regulations of the United States, Ripple’s current CEO, Brad Garlinghouse tweeted,

“Strongest internet companies built in the US, in part b/c of regulatory clarity. We have that opp with blockchain + digital assets. Responsible players like Ripple aren’t looking to avoid rules, we just want to operate in a jurisdiction where the rules are clear. #DCEA of 2020.”

This wasn’t the first time, Garlinghouse had called out the regulators of the United States. Towards the end of May, Ripple’s CEO shared a tweet urging the regulators to embrace crypto instead of hindering its growth.

Ripple is not the only crypto platform that has been prey to the uncertain regulatory climate. If the United States prolongs its hostility towards crypto, the country could lose its edge in digitalization.

China’s Blockchain and Fintech Superiority Might Oust America-led Global financial System, Says Ripple Co-founder

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China leads the world in terms of blockchain and fintech, while the US dollar is the reserve currency of the world. The United States has drawn a lot of criticism from industry experts for its inaction on cryptocurrency and blockchain technology. The latest person to comment on this subject is the co-founder of Ripple, Chris Larsen.

The co-founder and executive chairman of Ripple, Chris Larsen, published an op-ed piece arguing that the United States and China are drawn in a “technology cold war.” According to Larsen, the fact that Chinese miners control about 65 percent of the Bitcoin hash rate, they can gain complete control of the Bitcoin network in future. Moreover, the Ripple co-founder urged U.S. authorities to work in collaboration with blockchain and crypto firms in the country.

China’s blockchain and fintech supremacy

In Larsen’s argument, the superiority of China in blockchain and financial technology might be a significant catalyst to future conflicts between the two economic heavyweights. Furthermore, Larsen claims the U.S. dollar might lose its status as the world’s reserve currency in the wake of digital currencies, digital wallets, blockchain technology and interoperability procedures.

With China leading the world in the fronts as mentioned above, Larsen argues it creates a possibility for the nation to overtake the traditional financial system powered by the U.S. dollar through digital payments such as crypto-assets such as the digital yuan. In his piece, Larsen noted:

“For China, this is a once-in-a-century opportunity to wrest away American stewardship of the global financial system, including its ultimate goal of replacing the dollar with a digital yuan.” 

Can the Chinese reverse Bitcoin transactions?

According to a study conducted by the University of Cambridge Centre for Alternative Finance, 65 percent of all cryptocurrency mining operations take place in China. In Larsen’s argument, if the United States loses financial superiority to China, it could threaten digital currencies. He argues that the Chinese could take advantage of the accumulated hash power to influence crypto transactions.

China and the United States are currently embroiled in a battle surrounding technology advancement. Notably, the two companies are battling on the upcoming 5G technology. Chinese firms have been pushing aggressively to have a bite of the American telecom market. Still, U.S. authorities have put in place barriers to the Chinese, citing matters of national security.

Ripple Founder Chris Larsen Wants to Replace SWIFT and Create an ‘Internet of Value’

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Ripple’s mission to change the way people use the market for remittances was very clear. Chris Larsen, founder of Ripple, said earlier that the company was steadfast in changing the financial landscape with blockchain technology and On-Demand Liquidity [ODL].

Larsen also spoke about Ripple’s work recently when Michael Arrington, CEO, discussed a three-step plan with Arrington Capital. During the discussion, the CEO of Ripple reiterated the idea of changing the way capital moves.

According to Chris Larsen, Ripple was meant to be more than just an Internet money transfer system. He envisioned the company as transforming the online space into a value-added Internet where users can have access to a transparent financial framework. One of the first steps on this journey was to replace SWIFT as the current leader in money transfer. SWIFT has been the preferred method of transfer for years now with clients such as Western Union and HSBC.

Ripple and its officials have been confident in achieving the goals set for the fintech organization. The company wants to displace fiat and create corresponding banking where there is no third party watching over your transaction, said Larsen. In the founder’s words:

“We are looking at how we can get on board the Interledger Protocol [ILP] train and do it well. There are plans to use XRO in the ODL and then create capital whenever necessary. This will solve the problems faced by banks where they need to store capital in different parts of the world.”

Larsen admitted that the current financial models where all inefficient where users were the most affected. The current settlement rates for fiat transfers were appalling as many complained about clogged payment corridors. Ripple’s idea of activating the ODL works on the basis of providing rapid liquidity. Startups like MoneyTap have taken the feature and implemented it across payment corridors towards Mexico.

 

Ripple founder reiterates that crypto and fiat working together would create wonders in financial ecosystem

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Ripple has been one of the few companies in the cryptocurrency industry that has stated that instead of fighting against banks, cryptocurrencies can be used to make the fiat process faster and the financial ecosystem much more streamlined. During a recent Ripple Drop interview with Chris Larsen, the billionaire founder of Ripple reiterated the fact that the company was building a foundation upon which multiple layers of technology could work.

Larsen claimed that Ripple focused on moving value with the help of the distributed ledger in a bid to make transactions faster and more transparent. The founder said:

“What we are planning to achieve is analogous to the internet protocol. Digital assets are impossible without the all important blockchain technology and these assets in turn play an important role in reducing liquidity, overall costs and greasing the value of other assets like the dollar and the pound.”

Chris Larsen also admitted that fiat currency will remain the dominant form of capital but what crypto and blockchain can do is to supplement that growth. The founder was further asked about the situation of regulatory clarity in the United States and what should be improved. According to the Ripple official, the key word is ‘clarity’ because that is what is missing in the States. In his words:

“There are way too many inconsistencies in our rules with way too many question marks about basic aspects of regulations. This is what is holding back innovation and developments in the space which truthfully has to boom. We at Ripple advocate that the best system that can be opted by the government will take into consideration the customer first.”

Larsen urged governmental agencies such as the FINCEN and the Treasury to work together so that cryptocurrencies can be fostered in an environment of safety and innovation. The best part is that the advantages of using such a technology will be felt positively across the board, he said. Ripple’s founder was frank in admitting that even though the United States may not have crypto laws like Singapore or Switzerland, it still needs their regulatory clarity.

Ripple had another reason to rejoice yesterday as its native cryptocurrency, XRP saw its liquidity index hit an all time high on Bitso, a popular cryptocurrency exchange. The XRP/MXN pairing on Bitso scored an all-time rate of 6.254 million, beating the previous ATH of 5.993 million.