Cardano founder: Ripple’s XRP is not a security – but there’s still a catch
Cardano founder Charles Hoskinson has spoken out again about the Ripple lawsuit. According to the mathematician, XRP – in its current form – is safe from the SEC, even though Ripple, the issuing company, is in trouble.
In an „Ask Me Anything“ (AMA) session on YouTube last week, Cardano founder Charles Hoskinson spoke about ADA, upcoming Cardano developments and the Crypto Engine uproar surrounding the alleged unlicensed securities sale by San Francisco-based payments firm Ripple.
Earlier this month, the Securities and Exchange Commission (SEC) filed a complaint against Ripple and its two co-founders Brad Garlinghouse and Chris Larsen. The regulator accuses the duo of making over $700 million from the illegal sale of XRP, among other serious legal violations.
But despite the SEC calling Ripple’s XRP a security, Hoskinson is not convinced. He says in the AMA:
„I don’t think XRP is a security, and I think in its current form, its current use and the level of decentralisation that the ecosystem has, that’s certainly true.“
However, the Cardano founder also adds:
„Was Ripple a security at some point in its life? I’m sure you could argue that.“
Hoskinson, who was part of Ethereum’s founding team before turning his attention to Cardano’s development, expressed concerns about the way Ripple’s XRP was distributed – and claims that the co-founders pocketed the big bucks in the process.
„There was certainly security-related behaviour and it’s deeply puzzling to me why, for example, in the age of smart contracts, a real company should be responsible for distributing a token. It doesn’t make sense now.
According to Hoskinson, it doesn’t have to be if you have an existing, functioning network. He also adds:
„That alone is problematic, especially if there’s discretion with the custodian company to issue that.“
Either way, the regulation of cryptocurrencies remains a grey area, Hoskinson says:
„The problem with cryptocurrencies is that they do everything and nothing. Some days they look like securities, some days they look like commodities, some days they look like currencies and some days they look like something else entirely.“
Ripple: „We will address these unproven claims“
Meanwhile, Ripple has spoken out in a statement:
„The public and press have only heard the story from the SEC’s side, and we will be filing our response in a few weeks to address these unproven allegations against Ripple.“
The company even parroted Garlinghouse’s „attack on crypto“ statement (which was met with criticism in crypto circles) in its own release, writing that „innocent“ XRP holders were unfairly affected.
Ripple writes that despite the lawsuit, it will continue to serve US citizens and operate in US markets and offer its products. In any case, it said, much of its XRP volume is transacted in countries outside the US.
„Our unwavering commitment to constructive regulatory engagement has not changed,“ the company concludes.