The US Securities and Exchange Commission (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, which is known to be the third-largest cryptocurrency by market value in the world.
The lawsuit says that XRO is a security not currency, claiming that Ripple's former CEO and founder Christian Larsen and its current CEO Bradley Garlinghouse violated securities laws by selling XRP over a seven-year period starting in 2013.
The suit further said that the "illegal securities offering" created an information asymmetry that let Ripple sell XRP to investors who only knew what Larsen and Garlinghouse chose to tell them, The Verge reported on Tuesday.
"According to Garlinghouse, it's a virtual currency, which means the SEC has nothing to do with it".
The SEC has previously ruled that Bitcoin and Ethereum, the top two cryptocurrencies, are currencies.
Some reports suggest that XRP differs from Bitcoin and Ethereum, which may have caused the US SEC to call it security than a currency. The top two cryptocurrencies are created through a "mining" process which is ongoing, while Ripple started XRP by creating 100 billion units all at once.
With inputs from IANS