Bitcoin Controlled By China, Ripple Tells SEC In Face Of Imminent Lawsuit

Ripple Labs Inc claimed — if the U.S. Securities and Exchange Commission deems its token to be an investment contract — the regulator would cede innovation in cryptocurrency to China, which controls Bitcoin (BTC) and Ethereum (ETH).

What Happened: “The Bitcoin and Ethereum blockchains are highly susceptible to Chinese control because both are subject to simple majority rule, whereas the XRPL prevents comparable centralization,” said Ripple, the company behind the XRP token, in a wells notice to the SEC.

Ethereum founder Vitalik Buterin came down heavily on Ripple and said the company was sinking to “new levels of strangeness.”

Looks like the Ripple/XRP team is sinking to new levels of strangeness. They're claiming that their shitcoin should not be called a security for *public policy reasons*, namely because Bitcoin and Ethereum are "Chinese-controlled". https://t.co/ts02JqrTrB pic.twitter.com/mKwEzGIetk

— vitalik.eth (@VitalikButerin) December 22, 2020

Why It Matters:The fintech firm has vowed to defend itself against a yet-to-be filed lawsuit from the SEC against its CEO Brad Garlinghouse and co-founder Chris Larsen in federal court.

The lawsuit is centered on whether XRP is a security that should be registered with the regulator or not.

A former partner at Goldman Sachs Group Inc GS and founder of financial services firm Galaxy Digital Michael Novogratz noted on Twitter that BTC and ETH “seem to have an SEC pass,” while commenting on the upcoming XRP lawsuit.

Novogratz also found it strange that SEC chairman Jay Clayton “waited years to do this." 

In 2018, the head of the SEC division of corporate finance, William Hinman, had said that BTC and ETH are not securities. At the time, Hinman had said that decentralization is the key to whether or not a currency is a security. 

Price Action: Ripple traded 18.21% lower at $0.46 at press time, while BTC traded 5.27% lower at $22,652.19. ETH traded 6.05% lower at $605.39. On Friday, Grayscale Bitcoin Trust closed 4.58% higher at $30.83.

Related Link: ETH Cryptocurrency Surges 2.7% As Grayscale Ethereum Trust Becomes SEC Reporting Company