Ripple, Larsen, and Garlinghouse allegedly raised more than $1.3 billion funds from investors in the U.S. and overseas by selling XRP through unregistered security offerings starting in 2013. The cryptocurrency company also allegedly distributed billions of XRP in exchange for non-cash consideration, such as labor and market-making services.
Additionally, the SEC alleged that Larsen and Garlinghouse also personally sold unregistered totaling approximately $600 million.
“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system,” according to Stephanie Avakian, Director of the Enforcement Division of the SEC.
She also stated, “Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution, and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies.”