SBI Holdings, a Tokyo-based financial services company group, has published a statement outlining its position on whether it will continue to do business with Ripple or not in the wake of the lawsuit filed by the U.S. Securities and Exchange Commission (SEC).
Ripple utilizes blockchain technology to reduce the cost of global remittances
The SEC filed a lawsuit against Ripple and its two principals – CEO Brad Garlinghouse and Chairman Chris Larsen – for raising $1.3 billion through an unregistered and ongoing XRP token sale.
Garlinghouse has come out publicly to defend Ripple and claim that the securities regulator does not have a water-tight case against the company.
Is XRP a security?
Ripple’s major source of funding has been the sale of the XRP digital currency to both retail and institutional investors via exchanges. The blockchain company claims to have no control over the token despite controlling the lion’s share of XRP’s supply.
In SEC’s view, the sale of XRP tokens is akin to an unregistered stock sale.
Quoting an article written by Sadakazu Osaki, a fellow of the Nomura Research Institute, SBI considers XRP to be a “cryptocurrency asset” and not a security. The legal standing of XRP in Japan will not be affected by the proceedings between Ripple and the SEC, the company said.
XRP will continue to trade as a cryptocurrency asset on Japanese exchanges and the financial services company does not think that there will be a problem in the future.
SBI invests in Ripple, not XRP
The group highlighted that it is invested in Ripple shares and not directly in XRP. The company added that the fall of XRP prices will not have adverse effects on its expected business outcomes.
The lawsuit has negatively impacted the price of XRP. The token has shed more than 60% of its value following the announcement of the enforcement action by the securities regulator. A number of exchanges have begun delisting or suspending XRP trading on their platforms.
A major blow will likely come from U.S. exchange Coinbase which is reportedly weighing its options on the proceedings.
SBI has pledged to “actively support the activities of Ripple to expand its use in Japan and overseas.”
Ripple is no stranger to legal controversies. The company was fined $700,000 by the Financial Enforcement Network (FinCEN) for flouting the Bank Secrecy Act.
Garlinghouse previously stated that the company will relocate from the U.S. to a more crypto-friendly territory.