The price of XRP has been on a decline since the reports that the Securities and Exchange Commission will sue Ripple for executing the digital asset’s first cryptocurrency offer.
Following the lawsuit that Ripple described as an insult to the entire cryptocurrency market, there are a number of companies that are starting to quit XRP-related services that the company has been trying to adopt banks for years.
In a letter to Clayton, former SEC commissioner Joseph Grundfest said:
“No immediate cause requires immediate action.”
Grundfest declined to comment further, but confirmed the accuracy of the letter.
A representative of Ripple, who also declined to comment on the letter, said Grundfest was a non-paid consultant for the firm.
“The views of the upcoming Administration and Congress regarding the regulation of transactions similar to those in question may differ significantly from current perspectives,” Grundfest wrote.
The SEC claims that the sale and issuance of XRP was an unregistered securities offer that gave Ripple co-founders Brad Garlinghouse and Chris Larson “the most control” over XRP.
Grundfest, who was appointed as SEC commissioner by Ronald Reagan, said the sanction action could have a negative impact on XRP owners, who, according to him, were “innocent third parties”.
“But simply starting the action will do significant harm to innocent XRP holders, whatever the ultimate solution. After the transaction is learned, the brokers will stop trading on XRP due to the related legal risk. The resulting decrease in liquidity will cause the value of XRP to decrease. “
Some market makers have cut liquidity support for XRP. And rumors are swirling that Coinbase may cut support for XRP at some capacity.
This will result in an “unprecedented” loss scenario of billions of dollars due to migration of intermediary market service providers.
Given that the agency does not show “a material distinction between the operation of Ethereum and XRP regarding the implementation of federal securities laws”, he said XRP and Ethereum should be treated the same.
At the last check, XRP fell more than 39% since the case news hit the market.