Ripple, the company behind cryptocurrency XRP, has formally responded to a Securities and Exchange Commission (SEC) lawsuit filed in December that alleged that the company conducted a $1.3B unregistered securities offering. Ripple argues that XRP is a virtual currency and therefore, outside the SEC’s jurisdiction.

Why should we care?
Ripple is one of the most valuable companies in the crypto industry and the legal action is being watched closely by other industry players. The SEC alleges that XRP is a security that should have been registered with the SEC prior to the sale of billions of XRP to retail investors. In its response, Ripple argued that it never entered a contract for an investment with any holders of XRP. It claims the SEC is out of step with global trends in the space. It noted that no securities regulator in the world claimed that transactions in XRP must be registered as securities, and that registration as a security would impair its main utility. Meanwhile, XRP’s value continued to rise and fall along a whipsaw pattern on Monday Feb. 1, as a coordinated buying effort from traders on Reddit, Telegram and other platforms drove up the cryptocurrency’s value to two-month highs early Monday; the cryptocurrency’s value fell 40% later in the day.