Just a few weeks ago, XRP outperformed Bitcoin, and everything related to Ripple got underway. But less than 10 days ago, it all came to an abrupt accident end.
It turned out that it United States Securities and Exchange Commission (SEC) built a case against Ripple, and its two top executives, over securities fraud.
The complaint alleges that, as of 2013, Ripple raised money through the sale of digital assets, known as XRP, in an unregistered securities offering to investors in the US and worldwide. Ripple is also said to have distributed billions of XRP in exchange for non-cash payments, such as labor and market making services. “
The news shocked the cryptocurrency world. More so, the timing of the announcement, in the sense that the SEC leadership has only weeks left before leaving office, along with the rest of the Trump administration.
The XRP price suffered greatly. From its mid-November high so far of just under $ 0.80, XRP has dropped to $ 0.1686 at one point. This represents a decrease of 79%.
Today there is some semblance of a bounce back, with price up 2% in the past 24 hours to $ 0.2198 at the time of writing.
Source: XRPUSDT on TradingView.com
XRP Exchange Exodus speeds up
Each passing day sees another crypto exchange suspend or completely remove XRP trading. Yesterday was the turn Binance USA, which chose to scrap XRP effective January 13, 2021.
According to crypto researcher Larry Cermak, making Kraken the only major exchange serving US users looking to trade XRP. However, Cermak believes that Kraken will soon fall in line with the others.
Kraken is now officially the last major exchange to serve US customers who haven’t removed XRP yet. Coinbase, Bitstamp, Bittrex, Binance US, FTX US have all already been removed. Announcement must be imminent.
– Larry Cermak 🟨 (@lawmaster) December 30, 2020
The latest development sees a pre-trial conference set for February 2021, in which all parties have the opportunity to discuss the way forward.
Although Garlinghouse has been silent on the matter since Christmas Eve, it looks like this case will go all the way to court.
What’s especially concerning to XRP holders is that the SEC has rarely lost a lawsuit. And never one with cryptocurrency security tokens.
The SEC has a strong track record
To determine what could happen to Ripple, look at past cryptocurrency-related run-ins with the SEC.
YouTuber Ben Armstrong, aka BitBoy Crypto, posted one video at exactly that. In it, he refers to cases involving Tezos, EOS, Telegram and Kik.
In the case of Tezos and EOS, Armstrong pointed out that both companies were collapsing and paying their respective settlements. That means neither company went as far as to go to court.
While Telegram and Kik chose to challenge the SEC.
The outcome for Telegram saw the court party to the SEC, resulting in a civil fine of $ 18.5 million and the return of $ 1.2 billion to investors on the sale of unregistered Gram tokens.
In case of Kik, the court also sided with the SEC over allegations of illegally selling its unregistered Kin tokens. The company was fined $ 5 million.
As such, while Garlinghouse says “not only will we be on the right side of the law, but we will be on the right side of history”, the truth is that the SEC has a strong track record.
With that, the opportunities are heavily stacked against Ripple.