This Tuesday, Coinbase chief legal officer Paul Grewal said in a blog post that the platform will suspend trading in cryptocurrency XRP from next month. The decision has been taken in reaction to the United States Securities and Exchange Commission (SEC) taking legal action against Ripple, the company behind XRP.
The company has announced that trading on the platform will move into “limit only” starting December 28, 2020 at 2:30 PM PST, and will be fully suspended on Tuesday, January 19, 2021 at 10 a.m. PST.
The announcement led to a steep drop in the price of XRP in just 20 minutes, as it fell from $0.28 to $0.24. Overall, the cryptocurrency’s value has dropped by more than 50% since the SEC’s lawsuit last week.
The American technology company Ripple created and sold XRP, which was the third biggest cryptocurrency by market value. However, the SEC has charged two Ripple executives for the personal gains that they received from the initial coin offerings (ICOs). ICO, like an initial public offering (IPO), is where a company looks to raise money to create a new coin, app, or service launches an ICO to raise funds.
The SEC’s complaint is quite like another one filed by XRP investors against Ripple last year. That complaint charged Ripple founders with “an intent to defraud and deceive” investors by holding an unregistered sale of securities.
Moreover, Coinbase plans to go public, and since XRP is being viewed as a security, it could come in the way of a successful filing. Thus, it’s clear why Coinbase has taken the decision to suspend trading of the cryptocurrency.
Other platforms have also responded, with Crypto exchange OKCoin announcing that it will suspend XRP trading and deposits beginning on Jan. 4. Bitcoin exchange Bitstamp also stated it will halt XRP trading for U.S. residents, while smaller exchanges including OSL, Beaxy and CrossTower announced they will take similar actions against trading the token.
Since being founded in 2012, San Francisco-based Coinbase has become one of the most renowned cryptocurrency platforms worldwide and has more than 35 million users in more than 100 countries.
Coinbase has ensured to its customers that the trading suspension will not impede their access to XRP wallets. These wallets will remain available for deposit and withdrawal after the trading suspension. Coinbase has also ensured that it will continue to monitor legal developments related to XRP and update its customers as more information comes out.