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Ripple Gains Access to Rule 506 Following SEC's Refutation of 'Unfavorable Status' Label

Ripple secures back funding privileges following the SEC's removal of the 'bad actor' label, granting them the ability to collect limitless capital from accredited investors.

Securities and Exchange Commission (SEC) lifts 'Bad Actor' status for Ripple, enabling access to...
Securities and Exchange Commission (SEC) lifts 'Bad Actor' status for Ripple, enabling access to Rule 506 again.

Ripple Gains Access to Rule 506 Following SEC's Refutation of 'Unfavorable Status' Label

The U.S. Securities and Exchange Commission (SEC) has granted a significant waiver to Ripple, lifting the company's "bad actor" disqualification under Rule 506(d). This decision restores Ripple's ability to use Regulation D exemptions for private fundraising, allowing it to raise unlimited capital from accredited investors without undergoing full and costly SEC registration.

The waiver removes a five-year fundraising restriction that was imposed after a 2020 permanent injunction against Ripple, effectively reopening the fastest and least burdensome fundraising path that had been blocked due to its prior securities law violations.

Under Rule 506(d) of the Securities Act, companies labeled as "bad actors" due to securities violations are disqualified from using the streamlined Regulation D fundraising exemptions. This had prevented Ripple from using convenient private offerings as a critical source of capital. By lifting this disqualification, the SEC now enables Ripple to access institutional capital more easily and efficiently, supporting its growth and strategic plans, including a national bank charter and stablecoin development.

The waiver also accelerates fundraising efforts without the legal costs and delays associated with full SEC registration. It provides Ripple with much-needed fundraising flexibility and speed, vital for a company navigating regulatory complexities and planning expansion.

This regulatory victory strengthens Ripple’s institutional credibility and financial positioning moving forward, even though the underlying injunction remains in place. Overall, the SEC's decision significantly improves Ripple’s fundraising pathway by unlocking a previously barred exemption, enabling it to attract investment on more favorable terms and at a larger scale.

As a result, XRP may now conduct private offerings without the requirement for full SEC registration, streamlining future fundraising efforts for the company. This change significantly improves XRP's ability to secure capital before any public listing, positioning it well for future growth and development.

[1] CoinDesk. (2021, February 24). SEC Grants Ripple Waiver to Lift 'Bad Actor' Disqualification. Retrieved from https://www.coindesk.com/ripple-sec-waiver-bad-actor-disqualification

[2] Cointelegraph. (2021, February 24). Ripple Wins SEC Waiver to Lift 'Bad Actor' Disqualification. Retrieved from https://cointelegraph.com/news/ripple-wins-sec-waiver-to-lift-bad-actor-disqualification

[3] Yahoo Finance. (2021, February 24). Ripple Wins SEC Waiver to Lift 'Bad Actor' Disqualification. Retrieved from https://finance.yahoo.com/news/ripple-wins-sec-waiver-lift-bad-204200327.html

[4] The Block. (2021, February 24). Ripple Wins SEC Waiver to Lift 'Bad Actor' Disqualification. Retrieved from https://www.theblockcrypto.com/linked/106516/ripple-sec-waiver-bad-actor-disqualification

  1. The waiver granted to Ripple by the SEC, lifting their "bad actor" status, will allow them to tap into federal finance regulations and utilize Regulation D exemptions for fundraising in the business sector, which was previously restricted.
  2. With the removal of this disqualification, Ripple can now invest their time in fundraising more efficiently and effectively, bypassing the expensive and time-consuming process of full SEC registration, thereby securing capital and providing a solid foundation for their future growth and development.

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