Coinbase stated that it will suspend XRP trading, following last week's U.S. Securities and Exchange Commission lawsuit against Ripple Labs. 

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Coinbase first listed XRP on its retail-racing platforms almost two years ago, in February 2019. However, the company wrote that XPR trading "will move into limit only" starting now, and will be fully suspended on Tuesday, January 19th 2021, at 1pm ET.

 

Coinbase's chief legal officer Paul Grewal stated that they would continue to monitor legal developments related to XRP, and update customers as more information became available. 

 

Coinbase added that after the trading suspension, users' XRP wallets would remain available for receive and withdraw functionality. 

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However, the exchange will still support the upcoming airdrop of Spark tokens to XRP holders, and XRP will remain supported by Coinbase Custody and in the Coinbase Wallet. 

 

Within twenty minutes of Coinbase's announcement, XRP prices fell by four cents to $0.24. The price of XRP has plummeted by more than 50% following last week's SEC lawsuit. 

Due to the exchange's intentions of going public, Coinbase decided to drop XRP as a traded asset. Providing a platform for a potential security would mean additional paperwork simply so it could be legally allowed to let retail customers buy and sell a single cryptocurrency.

 

Last week, the SEC claimed that XRP is a security, and that Ripple had been selling it without seeking exemption or registering for seven years, raising $1.3 billion in the process. Ripple has indicated that it will fight the charges in court, and litigation might take years to resolve. 

 

Right now, Coinbase is the biggest exchange to take action regarding XRP. On Friday, Bitstamp decided to halt XRP deposits and trading for all U.S. customers starting January 8th.On Monday, OKCoin also announced it would be suspending XRP from January 4th.

 

In time, there could be consequences to face for exchanges that continue to list XRP without registering as a securities exchange with the SEC. However, Coinbase could likely re-list XRP without problems if Ripple prevails in its defense. 

 

Analyst and trader Alex Kruger stated that as crypto exchanges are unregistered with the SEC to avoid increased costs, it is in their best interest not to offer trading of securities. This is not the first time that Ripple has seen itself enmeshed in controversy. The technology company, founded by 2012 by Chris Larsen and Jed McCaleb, has gone through a series of prior lawsuits and fines. 

 

In 2015, FinCEN fined Ripple Labs and XRP II $700,000 for violating the Bank Secrecy Act (BSA). FinCEN announced that Ripple Labs had violated several requirements of the BSA by selling XRP without registering with FinCEN, and failing to implement an anti money-laundering program to protect its products. 

 

Ripple Labs agreed to take future steps regarding the issue, including an agreement to only transact XRP and "Ripple Trade" activity through registered money services businesses. 

 

The value and nature of XRP Cryptocurrency was questioned by a parliamentary inquiry into digital currencies that took place in May 2018. Stewart Hosie MP asked Ryan Zagone of Ripple if the company were trying to avoid making XRP look like a security or an equity in order to avoid the necessary regulation. 

 

Despite controlling the vast majority of XRP supply and earning most of its income from selling XRP, Ripple claims to have no control over the cryptocurrency. 

 

Ken Kurson, a former Ripple board member, was also charged with committing various cyber-crimes in October this year, leading to his resignation from the company. 

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