The U.S. Securities and Exchange Commission (SEC) has granted Ripple a waiver lifting its “bad actor” disqualification, clearing the way for the company to more easily raise private capital.
Understanding Regulation D
According to Rule 506(d) of the Securities Act, a firm is deemed a “bad actor” if it has breached securities regulations.
This designation bars such firms from relying on Rule 506 exemptions under Regulation D — a provision that allows businesses to obtain unlimited funding from accredited investors without going through the lengthy and costly SEC registration process.
Startups, including those in the cryptocurrency sector, often rely on this exemption to secure early funding efficiently before going public. Losing access to it makes raising capital privately much harder and less profitable.
Impact on Ripple
A permanent injunction issued by Judge Analisa Torres had previously stripped Ripple of the ability to use Rule 506, effectively closing off its simplest fundraising route for five years.
Now, with the SEC’s waiver in place, Ripple has regained access to this vital fundraising option, removing a major obstacle to securing investment.
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