XRP Surges on ‘Investor Hope’ That Ripple Defeats SEC
Crypto markets are struggling with most major coins and tokens in the red over the past week.
But one digital asset is surging: XRP. The sixth cryptocurrency by market cap is up nearly 21.6% in the past seven days, currently trading for $0.54, according to CoinGecko.
And it isn’t just this week: Its rapid ascent over 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 surge is in part due to investor confidence that the token’s creators will win a legal battle against the U.S. Securities and Exchange Commission, according to experts.
Ripple Labs, which was launched to help banks and other financial institutions move money fast and with very low fees, is still battling a 2020 lawsuit with the U.S. 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.
Wealthy Investors Still Feel Glum About Crypto—But Not XRP
Gary DeWaal, senior counsel at New York law firm Katten Muchin Rosenman LLP, told Decrypt that the XRP rally is “based on hope.”
He added that Ripple Labs team had in its filings raised a “fair notice defense”—arguing that they could not have known that XRP would’ve been considered a security.
In 2015, Ripple Labs paid $700,000 to the Department of Justice to resolve a criminal investigation. Part of this settlement included Ripple Labs formally acknowledging that XRP was a virtual currency (not a security.)
This, says DeWaal, is “totally inconsistent” with the SEC claim years later that the asset is a security—and could therefore swing in their favor. But he added that one can never predict the outcome of a case.
He commented that while investors were just speculating, if Ripple Labs does win, it would be historic for the crypto industry.
The SEC has launched its toughest crackdown on the crypto world in years under the body’s chairman, Gary Gensler. The regulator boss wants to crackdown on all coins and tokens—and the firms trading them—that he claims are unregistered securities.
This year, he has already hit major U.S. crypto companies, such as exchange Kraken, and Genesis and Gemini, with hefty fines.
Last week, the regulator issued America’s biggest crypto exchange Coinbase with a Wells Notice, meaning that enforcement against the San Francisco-based exchange is coming.
