The U.S. Securities and Exchange Commission (SEC) has lifted Ripple's bad actor designation, simplifying the private fundraising process for the company.
What is Regulation D?
Under Rule 506(d) of the Securities Act, a company is labeled a bad actor if it has violated securities laws.
This label automatically disqualifies such companies from using Rule 506 exemptions under Regulation D, allowing them to raise unlimited funds from accredited investors without a cumbersome and time-consuming SEC registration process.
Startups, including cryptocurrency companies, tend to use this tool for fundraising before considering going public, saving time and legal costs. However, the designation makes private fundraising significantly more challenging.
Ripple's Bad Actor Designation Lifted
A permanent injunction imposed by Judge Analisa Torres disqualified Ripple from using Rule 506 for five years. However, now that the SEC has issued a waiver, Ripple can avoid this roadblock.
Impact on Ripple's Funding
The lifting of the bad actor status significantly simplifies the private fundraising process for Ripple, allowing the company to attract investments more effectively in the future, enhancing its competitiveness in the market.
The SEC's decision to lift Ripple's bad actor designation opens new opportunities for the company at a time when the fundraising process is crucial for its continued development.
