Plaintiff – Securities Exchange Commission(SEC)
Defendent – Ripple Labs
Ripple(XRP) is the 3rd biggest cryptocurrency by market capitalization. It was created by a company initially called Newcoin.Inc(later named into Ripple Labs in 2013).
They basically created XRP tokens as a part of an “Open-source software project” and distributed them and thereafter “gifted” themselves 80% of it.
SEC has sued both the founder and current CEO of tech company Ripple for raising more than $1.3 billion through an “unregistered securities offering” after selling their cryptocurrency called XRP over a period of 7 years since the company started in 2013.
Ripple claims that XRP is just like Bitcoin(BTC) and Ether(ETH)(read an earlier snippet on the difference between BTC and XRP). But BTC and ETH are created, managed in a way entirely different than XRP.
The lawsuit by SEC is meant to protect the investors who usually invest in a security hoping they would gain profit over time. It was impending considering how Ripple had raised more than a billion dollars.
Though it also provides payment settlement system as its core business, Ripple Labs just created a currency of its own(though they claim it was part of an open source network), gifted 80% of it to itself and sold the rest to investors, creating sufficient demand and holding most of it with itself!