Kraken announced on January 15 that it would suspend XRP trading for U.S. residents, joining a growing list of exchanges responding to the SEC's lawsuit against Ripple Labs. The decision reflects heightened regulatory scrutiny over XRP’s classification as a security.
Key Details of Kraken’s XRP Freeze
- Scope: Only U.S. residents are affected; global users retain full access.
- Allowed Actions: Deposits, withdrawals, and holding XRP remain permitted.
- Reason: SEC’s December 23 charges against Ripple Labs for allegedly selling $1.2 billion in unregistered securities (XRP).
The exchange emphasized flexibility, noting policies may adjust based on legal developments. Notably, Kraken’s participation in the Spark token airdrop continues unchanged.
SEC’s Case Against Ripple: Core Allegations
The SEC’s lawsuit targets:
- Ripple Labs: Accused of facilitating unregistered XRP sales.
- Executives: Former CEO Christian Larsen and current CEO Brad Garlinghouse face charges for $600 million in additional XRP sales.
Garlinghouse has publicly defended Ripple, citing:
- XRP’s seven-year operational history.
- Regulatory clarity in multiple countries classifying XRP as a currency, not a security.
"We’re on the right side of the facts and of history… [and] look forward to our day in court."
— Brad Garlinghouse (January 7, 2021)
Market Impact and Exchange Reactions
- XRP Price: Plummeted from November highs (~$0.60) to under $0.20 in December, then rebounded to ~$0.30 in January.
- Exchanges: Coinbase, Bitstamp, and others paused XRP trading for U.S. users.
- Compliance Focus: Despite only 5% of Ripple’s customers being U.S.-based, exchanges prioritize regulatory alignment.
SEC Commissioner Hester Peirce (“Crypto Mom”) hinted at potential out-of-court settlements, common in such cases.
FAQs
Q: Can U.S. users still withdraw XRP from Kraken?
A: Yes—deposits, withdrawals, and holding remain active.
Q: Will Kraken relist XRP if the SEC case resolves?
A: Kraken stated it will adapt policies based on legal outcomes.
Q: How does this affect Spark token eligibility?
A: No impact; the airdrop proceeds as planned.
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