The SEC says that they raised more than $ 1.3 billion through an unregistered securities offering. The former CEO and founder Christian Larsen and CEO Bradley Garlinghouse are being sued by the US Securities and Exchange Commission.

The Wall Street Journal claims that the’illegal securities offering’ violated securities laws by selling XRP over a seven-year period.

The SEC has previously ruled that Bitcoin and Ethereum are currencies. The Justice Department treated XRP as a currency in 2015.

For those two cryptocurrencies, new coins are created through a’mining’ process, which is ongoing. Ripple owns about 6.4 billion XRP, and Garlinghouse and Larsen also own a good chunk of it. Another 48 billion XRP are held in reserve, for periodic sales.

The SEC is doing the opposite of’fostering innovation’ in the US. It’s not just XRP they’re attacking here here here in the U.S..

Bthe SEC has won similar suits against block.one and Kik in the past, saying that the initial coin offerings were actually securities. But that cases were different: Kik and block.one did their icos after an SEC directive in 2017.

Garlinghouse announced yesterday that the company expected the suit. The company has already published its wells response, a document that explains to the SEC that its actions were legal.

The Howey test was created by a 1946 Supreme Court case. That ruling defined a security as an investment of money in a shared enterprise with an expectation of profits from others’ work.