The bitcoin rival has lost a quarter of its value over the last 24 hours and more than half of its value since last week, taking its overall market cap below $12 billion (£9bn).
The latest price plunge was precipitated by formal charges being placed against Ripple by the Securities and Exchange Commission (SEC), who claimed that the company’s XRP token is a tradable asset, known as a security – rather than simply a digital currency.
“We allege that Ripple and its executives failed over a period of years to satisfy… core investor protection provisions, and as a result investors lacked information to which they were entitled,” Marc Berger, Deputy Director of the SEC's Enforcement Division, said after the SEC complaint was filed on Monday.
No action was taken against bitcoin, which differs significantly from XRP in that it is a decentralised cryptocurrency that is not issued by a company or government. US regulators previously said bitcoin should be treated as a commodity, like currencies, gold or oil.
Ripple CEO Bradley Garlinghouse told employees earlier this week that the lawsuit made “absolutely no sense” and that the company had “always tried to over-communicate, be as transparent as possible" with regulators.
He claimed that the legal action was essentially rooted in the SEC not understanding that XRP is a digital currency, rather than shares in a company.
“To be clear, this is all based on their illogical claim that XRP is, in their view, somehow the functional equivalent of a share of stock,” he wrote in a companywide email, which he has since shared in a blog post on Ripple’s website.
“We will aggressively fight – and prove our case – through this case we will get clear rules of the road for the industry here in the US. We are not only on the right side of the law, but we will be on the right side of history.”
Mr Garlinghouse also called out the SEC’s lack of action against other major cryptocurrencies, most notably bitcoin and ethereum (ether). He alleged that they were “two Chinese-controlled virtual currencies” and that the latest action would transfer innovation in the cryptocurrency industry to China.
Ethereum founder Vitalik Buterin reacted to the blog post on Twitter with laughing face emojis, adding, “Looks like the Ripple/XRP team is sinking to new levels of strangeness.”
Others within the cryptocurrency industry also criticised Ripple’s response to the charges.
“You cannot expect to participate in an industry approaching $1 trillion in worth and remain outside of the view of regulators,” said Antoni Trenchev, co-founder of cryptocurrency firm Nexo.
“It is important that things are done right – registering with the SEC and taking a considered overall approach to regulation is the only way to ensure that we, as a crypto business, can stay out of regulatory trouble.”
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