XRP Rises on ‘Investor Hope’ That Ripple Defeats SEC
Crypto markets are struggling with most major coins and tokens in the red this past week.
But one digital resource is on the rise: XRP. The sixth-largest cryptocurrency by market capitalization has risen nearly 21.6% over the past seven days, and is currently trading at $0.54, according to CoinGecko.
And it’s not just this week: The rapid rise during the first quarter of 2023 has seen it rise 55% since the start of January.
Why is XRP doing so well? The asset’s price rise is partly due to investor confidence that the token’s creators will win a legal battle against the US Securities and Exchange Commission, according to experts.
Ripple Labs, which was launched to help banks and other financial institutions move money quickly and with very low fees, is still fighting a 2020 lawsuit with the US Securities and Exchange Commission.
The SEC — which is currently cracking down on the crypto industry like never before — alleges that Ripple Labs and two of its co-founders misled investors by raising $1.3 billion in unregistered securities offerings since 2013.
Gary DeWaal, senior counsel at the New York law firm Katten Muchin Rosenman LLP, said Decrypt that the XRP rally is “based on hope.”
He added that in its filings the Ripple Labs team had raised a “fair notice defense” – arguing that they could not have known that XRP would be considered a security.
In 2015, Ripple Labs paid $700,000 to the Department of Justice to settle a criminal investigation. Part of this settlement included Ripple Labs formally recognizing that XRP was a virtual currency (not a security.)
This, DeWaal says, is “totally inconsistent” with the SEC’s claim years later that the asset is a security—and therefore could swing in their favor. But he added that you can never predict the outcome of a case.
He commented that while investors were just speculating, if Ripple Labs wins, it would be historic for the crypto industry.
The SEC has launched its toughest crackdown on the crypto world in years under the agency’s chairman, Gary Gensler. The regulator chief wants to crack down on all coins and tokens – and the firms that trade in them – which he claims are unregistered securities.
This year, he has already hit large American crypto companies, such as the stock exchange Kraken, and Genesis and Gemini, with heavy fines.
Last week, the regulator issued America’s largest crypto exchange Coinbase with a Wells Notice, meaning enforcement against the San Francisco-based exchange is coming.
