The complaint

On 22 December 2020, the United States Securities and Exchange Commission filed a complaint against

1. Ripple Lab Inc.;
2. Christian Larsen, the company's co-founder, executive chairman of its board, and former CEO; and
3. Bradley Garlinghouse, the company's current CEO.

The SEC alleges that they sold a "digital assets security" without registering this sale with the SEC. The question shall be judged according to the outcome of the first court judgement, irrespective of appeals.

Hubertus's comment

These unfolding events are a good reminder why Satoshi Nakamoto chose to remain anonymous. We must remember that each and every centralised non-sovereign digital money before bitcoin failed or was brought down.

The SEC's choice of term "digital assets security" for its allegation is fuzzy, to say the least. A "security" is something entirely different to a "digital asset". Now, mined bitcoin is definitely a digital asset: nobody in the decentralised core bitcoin acivity promises anybody anything. Mind, I am not talking about other activities in the bitcoin ecosystem, just bitcoin core.

Even without checking the detailed asset vs. security issue for XRP, one thing is clear: irrespective whether Ripple prevails, reputational and economic fallout for the company and its executives will still be enormous. Severeal crypo exchanges have already delisted Ripple and a class action suit has been initiated in next to no time.

PS: Elon Musk's little fallout with the SEC is not comparable because Musk's cars have tangible value whereas a money's value depends on its acceptance. Such acceptance currently still requires ties into the ifat money system. The bitcoin community must put more effort into cutting those ties.

Background material

• SEC Complaint (Original)
• "SEC Charges Ripple and Two Executives with Conducting $1.3 Billion Unregistered Securities Offering", SEC PR Website (22 Dec 2020)