SEC v. Ripple angers XRP holders as rival Stellar (XLM) mixed in “love triangle” over MoneyGram

Rick Steves

“Although the SEC claims that all XRP are unregistered securities and Brad Garlinghouse and Chris Larsen unjustly enriched themselves, it allows Ripple Co-founder JedMcCaleb to sell his XRP for hundreds of millions of dollars to possibly buy MoneyGram. Makes perfect sense”, said XRP Holders’ attorney John Denton ironically.

Block trading

MoneyGram is likely to be at the center stage of the Ripple v. Stellar rivalry while Jed McCaleb, the Ripple co-founder who left the firm in 2013 to start Stellar, continues to sell millions of XRP despite the ongoing SEC v. Ripple lawsuit.

Ripple bought a 9% stake in MoneyGram in 2019, worth $30 million, in a deal that allowed the payments services provider to use the blockchain’s firm technology for cross-border payment and foreign exchange settlement.

Everything changed on December 22, 2020. The Securities and Exchange Commission charged Ripple with conducting a $1.3 billion unregistered securities offering for selling XRP to investors over the years.

Ripple Labs has decided to take the legal challenge head-on and expose the lack of regulatory clarity within the digital asset space after dozens of complaints filed by the SEC against blockchain firms.

Two days after the SEC complaint, MoneyGram distanced itself from Ripple and claimed the firm wasn’t using the XRP Ledger via RippleNet and On-Demand Liquidity (ODL).

SEC v. Ripple: XRP Whale and rival Jed McCaleb is probably “praying that Ripple wins”

In March 2021, Ripple CEO Brad Garlinghouse said the partnership with MoneyGram would be revisited in the future but Ripple rival Stellar is reportedly mulling over acquiring the money transfer company.

This has led top figures within the XRP community to lash out, namely XRP Holders’ attorney John Deaton, who “facepalmed” on Twitter as he narrated the story step by step:

“In 2018, Ripple acquired a 9% stake in MoneyGram. The SEC allowed this purchase knowing that XRP would be distributed to MoneyGram and that MoneyGram would not hodl the XRP, but sell it in the secondary market on exchanges to individual investors.

“The SEC sues Ripple and claims that all XRP, including XRP sold in the secondary market by MoneyGram on exchanges like Coinbase to individual investors, were always unregistered securities. The SEC claims it filed the suit to protect individual investors from buying XRP.

“Although the SEC claims that all XRP are unregistered securities and Brad Garlinghouse and Chris Larsen unjustly enriched themselves, it allows Ripple Co-founder JedMcCaleb to sell his XRP for hundreds of millions of dollars to possibly buy MoneyGram. Makes perfect sense”, he tweeted.

Jed McCaleb received 8 billion XRP tokens for his role co-founder and CTO in the development of the OpenCoin company, which has since been rebranded to Ripple Labs.

McCaleb and Ripple reached an agreement in which he could sell 1.5% of XRP’s daily volume per day. In 2020, McCaleb sold a whopping $400 million worth of XRP and has sold almost 2.4 billion XRP so far this year, which may have been worth approximately $1.95 billion.

The SEC has made no public statement regarding Jed McCaleb’s XRP activity despite the ongoing SEC v. Ripple lawsuit, which had XRP being delisted by crypto exchanges in the United States, crippling the market.

In the meantime, Ripple and the individual defendants have struck lucky with two top SEC officials admitting to the overwhelming lack of clarity within the crypto space. This was a “gift from the heavens” as attorney Jeremy Hogan put it.

The bombshell from the SEC Commissioners could well save Ripple’s case as it aims to win on the Fair Notice defense, claiming the SEC hasn’t provide proper fair notice that selling XRP could be deemed as a security. The agency claims XRP is a security due to its centralized nature but Ripple always claimed it never held an ICO.

Also in the spotlight will be Ethereum (ETH) as the deposition of ex-SEC Director William Hinman will go forward next week. Not only the markets could make moves in reaction to his answers, but ETH could eventually be targeted by the SEC given the nature of its past fundraiser.

We have recently spoken to Natalia Zakharova, Head of Sales at FX and CFD broker FXOpen, about the lawsuit. As to whether XRP is a security: “As a broker offering CFD trading, we can say that it doesn’t really matter to us if XRP is a security or not.”

“XRP is a convertible digital currency, in other words, a measure of value. This was established back in 2015 when Ripple Labs and Department of Justice reached the settlement obliging Ripple to comply with US currency laws, as opposed to securities laws”, she said in the interview.

Natalia Zakharova then said XRP holders do not benefit directly from the performance of Ripple Labs and the market value of XRP does not correlate directly with the profitability of Ripple Labs.

You might want to read:

Ripple’s XRP ventures into tokenization, SEC Gensler warns of security issue: “Make no mistake”

SEC v. Ripple: “SEC is desperate for this deposition not to go forward. Desperate”

Grayscale – who dumped XRP amid SEC v. Ripple – partners with BNY Mellon ahead of ETF conversion

SEC v. Ripple: Settlement could bottleneck flow of XRP, says expert

Read this next

Digital Assets

Point72 invests $77.5 million in Bitcoin, Morgan Stanley holds $269.9 million

Point72, the $34 billion hedge fund owned by billionaire and New York Mets owner Steven Cohen, held $77.5 million in the Fidelity Wise Origin Bitcoin Fund (FBTC) at the end of the first quarter, according to a recent filing.

Digital Assets

Binance claims Nigerian officials sought $150 million bribe

A Nigerian court has ruled that Tigran Gambaryan, a Binance executive detained on charges of tax evasion and money laundering, can stand trial on behalf of the world’s largest cryptocurrency exchange.

Digital Assets

Kraken reviews Tether listing in Europe ahead of MiCA adoption

Cryptocurrency exchange Kraken is “actively reviewing” whether to delist the stablecoin Tether (USDT) from its European platform, according to a report by Bloomberg.


Discover How MoonBag Coin Presale Stacks Up Against Dogecoin & Litecoin

Discover how the MoonBag Coin presale compares to Dogecoin and Litecoin, with unique features, a robust presale structure, and new opportunities in 2024.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: Federal Reserve Policy, USD, May 17 ,2024

Overall, both the Federal Reserve’s policy and the US dollar’s outlook are shrouded in some degree of uncertainty.

Market News, Tech and Fundamental, Technical Analysis

Ethereum Technical Analysis Report 17 May, 2024

Ethereum cryptocurrency can be expected to rise further toward the next resistance level 3200.00, which is the top of the previous impulse wave i.

Digital Assets

Hong Kong adopts digital yuan payments through Chinese banks

Hong Kong has launched a pilot program enabling digital yuan payments through major Chinese banks, marking the first instance of China’s digital currency project being deployed outside the mainland.

Retail FX

Saxo Bank increases client assets five-fold to $116 billion

Copenhagen-based broker Saxo Bank has achieved a major milestone, surpassing $116 billion (DKK 800 billion) in client assets.

Inside View

ISDA says US Basel III “endgame” to heighten market risk capital

ISDA further explained that, by requiring banks to hold additional capital that is misaligned with levels of risk, the proposal would significantly reduce capital market access for US end users and businesses, restrict the ability of businesses to hedge exposures to changes in commodity prices, and increase the cost of everyday consumer goods, including food and gasoline.