Daily Hodl Staff
A popular crypto analyst is laying out the possible reasons why the U.S. Securities and Exchange Commission (SEC) went after Ripple with a lawsuit.
In a new video, Coin Bureau host Guy tells his 2.03 million YouTube subscribers that many other crypto projects fit the profile of XRP but the SEC targeted the seventh-largest cryptocurrency due to the fact Ripple is based in the US.
“This makes it much easier for the SEC to go after compared with other large crypto projects that are based elsewhere. The thing is that the SEC does seem to be going after those too as revealed by its surprise lawsuit against Terra and its Mirror protocol late last year. The SEC has gone after overseas crypto companies in the past as well.”
The analyst says that Ripple’s deep pockets are also to blame for the lawsuit.
“The second possible reason is that Ripple has a lot of money and the SEC is trying to secure a sizable settlement that will make for good headlines and potentially be used to fund the expansion of its regulatory operations.”
If this were true, then the SEC would try and maximize settlements by going after many of the other projects with similar approaches to Ripple. Also, they’ve only issued $2.4 billion in crypto-related fines since 2013, which host Guy believes isn’t much, all things considered.
He says that the third possibility is that the SEC needs a precedent to go after other crypto projects.
“XRP is one of the largest cryptocurrencies out there and by taking out one of the big guys, it sends a signal to the rest of the industry. The thing is that the SEC doesn’t have the resources to sue so many crypto projects.”
The fourth possible reason is “the threat of RippleNet,” the SWIFT payment system alternative that Ripple created.
“As far as I can tell RippleNet was actually seeing some adoption from financial institutions in select regions shortly after it launched in 2019. Given that the SEC likely first engaged Ripple in mid to late 2020, this suggests that it was a response to the threat of RippleNet rather than Ripple’s sales of XRP. It would also explain why the SEC waited so long to crack down on Ripple – but in truth, this timing could just be a coincidence.”
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