Jay Clayton resigns after SEC’s lawsuit against Ripple

The Securities and Exchange Commission Chairman, Jay Clayton, filed a resignation to President Donald Trump after filing a lawsuit against Ripple Labs and two of its major stockholders for failure to register the company’s revenue worth US$1.3 billion in a securities offering. Due to Clayton’s actions, many investors and Ripple users faced losses that resulted in more than US$50 billion.

In the resignation letter he filed, Clayton underlined his mission to keep investors ‘safe’ by creating a clear regulatory framework for digital assets in the market. During his time as SEC chairman, he filed charges against companies related to crypto offerings such as Block One and messaging app Telegram.

The SEC’s action forced a huge sell-off of digital assets in the market. Because of this, Ripple spiralled down to more than 50% in just a span of two days. Right now, the price of XRP is at US$0.25. Aside from Ripple, major assets such as Ethereum and Bitcoin were also affected, with prices dropping at US$600 and US$23,000, respectively.

According to the case filed by the SEC, Ripple’s failure to comply with the requirements resulted in the lack of information the company owed to its investors.

‘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’.

‘The registration requirements are designed to ensure that potential investors – including, importantly, retail investors – receive important information about an issuer’s business operations and financial condition. Here, we allege that Ripple and its executives failed over a period of years to satisfy these core investor protection provisions, and as a result, investors lacked information to which they were entitled, the statement continued.

On the other hand, Brad Garlinghouse, one of Ripple’s founders, said that the crypto regulations in the United States is not clear.

‘We’ve always said that there is a lack of regulatory clarity for crypto in the US, and the SEC here in the United States has sat back and watched for years. In fact, the discussion around why XRP is a currency (and not a security) is one we have been having with the SEC for nearly three years and yet we’ve never been met with clarity’, said Garlinghouse.