Ripple’s XRP cryptocurrency tumbled by as much 32% on Wednesday, after the US regulator filed a lawsuit against the company’s executives over sales of the token.
XRP lost as much as a third in value after the US regulator charged cryptocurrency firm Ripple over how it has sold the digital token.
The token fell to its lowest since November 20, effectively wiping out all of last month’s 177% gain.
Ripple’s CEO called the SEC’s claim “illogical” in a blogpost on Tuesday.
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XRP was last down 27% at $0.325, its lowest since November 20. The US Securities and Exchange Commission filed a lawsuit on Tuesday. It said blockchain company Ripple has been running a $1.3 billion unregistered offering, akin to an unlicensed stock sale, as it does not consider the XRP token to be a cryptocurrency.Ripple’s CEO, Bradley Garlinghouse, who is named in the suit, said the SEC hadn’t given the company “clarity” on whether its XPR offering is classified as a currency or security.
“To be clear, this is all based on their illogical claim that XRP is, in their view, somehow the functional equivalent of a share of stock,” Garlinghouse wrote on Ripple’s company blog. As the crypto industry has exploded in the last decade, the SEC and other agencies have struggled to classify and regulate them.In a separate action, the US Treasury’s Financial Crimes Enforcement Network last week proposed new disclosure rules to better keep tabs on crypto wallets. Investment in cryptocurrencies has boomed this year, taking the price of tokens such as bitcoin to record highs. XRP, a smaller competitor, traded at 2-½ year highs as recently as a month ago. In the last week, it has lost over 40% in value, almost wiping out November’s 177% rise.