Drake Wheeler
Todd Meislahn
Business Ethics
2/9/21
Ripple and the SEC
“The mission of the SEC is to protect investors; maintain fair, orderly and efficient
markets; and facilitate capital formation” (About the SEC, n.d.). I will be analyzing the
SEC’s actions in relation to their lawsuit against Ripple to discuss whether or not they
are following their mission statement and are being ethical. The SEC has filed a lawsuit
against Ripple. Ripple is a company that uses XRP, the cryptocurrency. The SEC has
alleged that Ripple is selling XRP as a security, meaning that the sale of XRP from
Ripple is an investment contract. Ripple has been using and selling XRP since 2012
and the SEC filed their lawsuit December, 22, 2020. I will discuss why XRP may or may
not be a security and whether or not the SEC is really protecting investors and being
ethical by filling this lawsuit. As well as whether or not it is ethical for Ripple to sell XRP.
Ripple is a company currently based in the United States. Ripple the company
was formed shortly after the XRP ledger was created by David Schwartz, Jed McCaleb,
and Arthur Bitto in 2012. Ripple Net is a distributed consensus ledger which uses a
network of validating servers, this is what XRP exists on. The purpose of XRP is to
provide fast, cheap cross-border transactions,”to move money with the same speed and
standards that information moves today”. (Ripple’s Mission in Action, 2020) “RippleNet’s
On-Demand Liquidity (ODL) service allows customers to reduce, even eliminate, the
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need to pre-fund accounts”. (Ripple’s Mission in Action, 2020) Using XRP banks are
able to send money anywhere in the world to any bank for fractions of a cent in under
10 seconds. This saves money and time because banks then do not have to find a
string of partnered banks to get money to a bank they are not partnered with. A bank
can buy XRP or send XRP they have to another bank and that XRP can be immediately
sold for the preferred fiat or crypto currency on the other end, bypassing today’s slow
and inefficient banking system. Today the CEO of Ripple is Brad Garlinghouse. Ripple is
a private company that has undergone five rounds of funding which raised capital from
venture funds, financial services companies, and some technology companies.
There are two ethical issues I am going to focus on from this lawsuit. The SEC is
suing Ripple for selling unregistered securities, the SECs mission is to protect investors,
I will analyze whether or not they are doing that with this lawsuit. Ripple sells XRP
