The legality of Ripple Labs’ token, XRP, has been questioned by Brad Sherman, a US Congressman. He has called upon the Securities and Exchange Commission (SEC) in the US to go after exchanges that have the token listed on their platforms.
According to Sherman, he has always been in support of the lawsuit that the securities regulator had filed against XRP’s parent company and the enforcement division drill session. But, he added that he was unhappy with the failure of the SEC in not tackling the exchanges that have not removed the XRP token from their platforms.
Division of Enforcement
The Division of Enforcement’s director of the SEC, Gurbir Grewal was also in attendance. The topic of discussion was the role of the SEC in terms of crypto monitoring and regulation. Sherman asserted that the enforcement division of the SEC really needs to step up in terms of its regulatory position in order to do their job effectively.
Sherman went on to say that the division had come to the conclusion that XRP is classified as a security and not a commodity. However, he added that the SEC had not taken any action against exchanges that are still offering it to their clients. Consequently, he said that tens of thousands involving the said token have been made, which makes them illegal and yet, the SEC has not taken any action to put a stop to it.
XRP’s status
He said that everyone involved in the case were fully aware that XRP is categorized as a security, which indicates that all exchanges that have been offering it are doing so illegally. Sherman urged the Enforcement Division of the SEC to pay attention to this problem.
The claims of the US Congressman were countered by Stuart Alderoty, the lawyer representing Ripple Labs. He stated that these claims are downright false because the case between the SEC and Ripple Labs is still ongoing and no ruling has been issued by the court on the matter as yet.
He also asserted that the enforcement approach of the SEC would also be affected negatively in such a situation, which would discourage businesses and harm innovation Alderoty said that these were unproven allegations and the company would continue to defend itself.
Legal matter
It should be noted that US Congressman Sherman has been a crypto critic from the very beginning. He had been the one who called on the government to ban cryptocurrencies entirely in 2018. As far as XRP is concerned, the SEC had filed a lawsuit against Ripple in 2020 over the token.
The securities regulator alleged that XRP is unregistered security, while Ripple Labs argues that it is a cryptocurrency and not a security. Since the lawsuit began, there are some exchanges, such as Coinbase, which stopped offering the token on their platform over concerns of any legal backlash. Gary Gensler, the Chairman of the SEC, has said that all crypto exchanges should be registered as securities exchanges, but nothing has come off it yet.
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