A lawsuit filed by the U.S. Securities and Exchange Commission against Ripple — the San Francisco-based blockchain payments firm — is already having knock-on effects on the price of the cryptocurrency. The commission is accusing Ripple of breaching securities laws through the sale of XRP to retail investors. According to the lawsuit, Ripple has raised $1.3 billion in sales of unregistered securities since 2013.
Ripple CEO Brad Garlinghouse argued that the legal action brought by the SEC against the firm is “an assault on crypto at large”. In a Dec 22 blog post, he wrote:
“Ripple, Chris, and I may be the ones named in the filing, but this is an assault on crypto at large. In this case, XRP is a proxy for every other ‘alt-coin’ in the space. From there, you have a snowball effect; this isn’t good news for any market maker, exchanges like Coinbase, etc. This sets a terrible industry-wide precedent for any company working with a digital asset.”
The CEO emphasized that he would “aggressively fight” to win the case with the SEC. Nonetheless, this was not enough to calm down jittery investors as the XRP price dropped hard. Several industry pundits have also expressed serious concerns about the situation. In the past 24 hours, the coin’s price has plunged by over 30% to $0.33.
Moreover, the SEC lawsuit has led to some exchanges even delisting XRP.
Trading Platforms Halt XRP Services At The Heart Of The SEC Lawsuit
In light of the SEC action, some exchanges have decided to suspend XRP trading services until a court decision is made. Hong Kong-based cryptocurrency trading and brokerage company OSL, for instance, has discontinued all XRP trading services on its platform until further notice.
Several other trading platforms like Beaxy and CrossTower have also suspended trading in the XRP cryptocurrency. One crypto lawyer has observed that if the court rules in the favor of the SEC, 10 of the exchanges listed on the lawsuit would be in deep trouble. In particular, two of these exchanges that are based in the U.S. would have to register with the commission as securities exchanges.
This implies that more exchanges could stop XRP trading services in the near future to avoid being caught up in the crosshairs of the SEC.
XRP Price Could Potentially Drop Further
Analysts expect more blood for the XRP cryptocurrency, at least until the legal tussle with the SEC is fully resolved. From a technical point of view, XRP is currently hovering in a do or die area. The crypto must rebound strongly above 35 cents or risk plummeting even further.
Ripple is in bounce or die kinda situation – flirting with the support of the cloud.$XRP pic.twitter.com/4t0VpM3qXQ
— yTedd (@TeddyCleps) December 23, 2020
Messari founder Ryan Selkis even thinks XRP could drop to as low as $0.10 by next month. In a Twitter thread a few hours ago, he pointed out reasons why he believes XRP’s price will be severely troubled come next year, positing that XRP investors are basically “f*cked”.
To be clear Ripple’s whole schtick was “crawl, walk, run.”
Crawl -> early retail builds liquidity
Walk -> institutional pilots
Run -> major ODL demand
They were still learning to walk and they just got their knees chopped off by a scythe.
— Ryan Bitcorn Selkis (@twobitidiot) December 23, 2020
Selkis further explained that XRP is not a favorite among institutional investors, unlike bitcoin and stablecoins. This will be exacerbated by the fact that the court battle with the SEC could drag on for at least one year. “It. Is. Over. For XRP,” Selkis summarized.
