The fact whether XRP, the fourth largest cryptocurrency according to market cap, is a security or not has been a question that has existed for years now. Due to the decentralized nature of cryptocurrencies, these can’t be classified as securities despite the fact that they are tradable assets as well. On the other hand, digital currencies like XRP are also created by private companies, and hence this sparks the debate about whether or not these cryptocurrencies could be considered a security.
However, according to veteran trader and crypto enthusiast Peter Brandt, XRP is actually a security. In a recent tweet, Brandt states that the only reason XRP hasn’t been declared security is the Securities and Exchange Commission’s (SEC) lack of understanding of the crypto industry.
Security or not?
If an asset is classified as a security, it must register under the SEC. While the SEC has been enigmatic about deciding which crypto assets are securities, it made it quite clear that Bitcoin and Ethereum are not securities taking into matter their decentralized nature.
But the case is different for XRP, and Ripple has been involved in various lawsuits trying to persuade the SEC that the token must not be classified as a security. The company was sued by an XRP investor Bradley Sostak who was suing the organization over his losses after investing in XRP, claiming that the firm misled investors and sold XRP as unregistered security in violation of federal law.
Former CFTC chairman Chris Giancarlo had also voiced in favor of Ripple stating that the “XRP should not be regulated as a security but instead considered a currency or a medium of exchange.”
Ripple’s primary argument is also similar as the company repeatedly asserts that the XRP ledger functions independently and is hence decentralized. If an investor owns XRP, it doesn’t mean owning a stake in the company.
Brandt labels Ripple as “bag holder”
However, Brandt continues to accuse Ripple of manipulating the market, and has previously called out XRP as a “manipulated scam.”The chartist states that Ripple is manipulated by a “bag-holder” because Ripple owns nearly half the total supply of XRP.
Brandt isn’t the only one thrashing XRP. A significant section of the XRP community had previously started a Change.org petition dubbed “Stop Ripple Dumping” after Ripple continued to sell their XRP holdings for unknown reasons throughout 2019.
Following this, the XRP community had also threatened to Fork XRP if Ripple did not address the situation.