- Ripple is a network that offers solutions for global payments and financial settlements. It is based on blockchain technology. Ripple conducts operations via a native digital asset XRP.
- It was designed to facilitate fast and cost-effective cross-border payments.
So, Ripple and XRP are like Bitcoin and BTC or Ethereum and ETH. However, Ripple makes waves in the news due to the SEC’s lawsuit against the company. You probably, already know how XRP works, so it’s critical t focus on what might happen to the coin depending on the lawsuit’s outcome.
This article focuses on the recent news about SEC vs. Ripple case and what may happen to the XRP crypto based on the lawsuit’s outcome.
SEC Vs. Ripple Lawsuit
Back in December 2020, the Securities and Exchange Commission (SEC) filed a complaint against Ripple Labs, Inc. The commission claims in the lawsuit that the business and its executives sold XRP as unregistered securities. XRP is the native cryptocurrency of the Ripple platform and is used by users to conduct cross-border payments.
According to the SEC’s lawsuit, Ripple and its executives (particularly CEO Brad Garlinghouse and co-founder Chris Larsen) generated more than $1.3 billion through the sale of XRP without complying with federal securities laws that require securities offerings to be registered according to SEC rules.
Moreover, SEC also accuses Ripple of developing a plan to create unnatural demand for XRP by paying market makers to purchase and sell digital assets. Ripple has denied the charges, claiming that XRP is a digital currency that functions independently of the corporation rather than a security. Thus, executives have no control over XRP circulation, demand, supply, etc.
The corporation’s executives have also claimed that the SEC’s charges contradict the opinions of other regulatory organizations, such as the Financial Crimes Enforcement Network and the Department of Justice. These two organizations have already classed XRP as a digital currency rather than a security.
The lawsuit is still in operation, although most experts say it will end in 2023. However, the outcome remains unknown, and it could greatly affect the future of the coin and all those who invested in XRP.
If the court determines that XRP is a security and that Ripple breached federal securities laws, Ripple and its executives may face substantial fines and other penalties. Moreover, the negative results for Ripple may mean stagnation of prices on its native coin.
The lawsuit’s outcome could also have broader implications for the cryptocurrency industry as a whole.
Recent Updates On The Lawsuit
As of today (December 28th), Ripple and XRP, and SEC are awaiting the final judgment summary. A pro-XRP lawyer John Deaton recently made a statement on Twitter, claiming that there is no consensus on the classification of securities classification. Thus, SEC can’t claim that XRP is a security and not a digital currency.
Deaton previously mentioned an alternative settlement solution for both parties as they await the final summary as soon as possible. According to him, Ripple would pay a $100-250 million settlement if the regulator agreed that ongoing and future XRP sales are not categorized as securities – but only under these circumstances. However, Deaton mentions that the likelihood of the SEC agreeing on such conditions is minimal.
It’s also worth mentioning that SEC has lost four out of five similar cases, which could mean the
jury will decide on a positive summary for Ripple. Still, it’s nearly impossible to make any predictions.
What Does This Mean For XRP Investors?
While the case’s final judgment is unknown and hard to predict, one thing is for sure – the decision will impact the XRP’s price. In fact, XRP’s price has already experienced a significant reduction. As mentioned, the SEC filed a lawsuit against Ripple in 2020, which caused an immediate reduction of XRP’s price from USD 0.70 to USD 0.20. Today, its price is USD 0.38.
In case Ripple loses the lawsuit, the XRP’s value will decrease, or it won’t experience significant price spikes, as other cryptocurrencies. However, some experts predict that if Ripple wins the case, XRP may double in price. Moreover, its value will continue to grow.
For regular investors, it means that they should be very cautious when buying XRP. Some may invest hoping that Ripple wins the case and XRP will increase in price. Thus, it sounds like a good investment. However, it’s a risky venture, as, in the case of Ripple’s loss, you could lose a lot of money.
Final Thoughts
It is clear that the SEC wants to be the main regulator in the cryptocurrency world. If SEC wins, it could have a huge impact on the entire crypto world since any digital token may be classified as a security. Thus, it’s critical to keep an eye on recent events and invest carefully to avoid significant losses.
