A few days ago, the price of XRP saw an upward trend after it reportedly nearly closed litigation with the Securities and Exchange Commission (SEC). The latter filed the lawsuit in 2020, accusing Ripple of having launched an unregistered security offering.
The lawsuit relied on XRP’s status as a digital currency rather than the SEC’s request that XRP should also be subject to the same laws that govern securities issuance. The SEC is determined to keep a close eye on Ripple, a move that resonated with the judicial system following a ruling that would allow regulators to acquire XRP transactional information overseas.
Ripple had filed a motion seeking to deny the SEC any right to MOUs to foreign regulators asking for their assistance in acquiring Ripple transactional information. Judge Sarah Netburn rejected the motion and instead let the SEC win. In her ruling, she stated that the SEC is allowed to obtain the information. However, she also noted that the judgment should not be viewed as an abuse of the court’s jurisdiction. Judge Netburn also instructed the SEC to provide documents from previous requests for information about Ripple within 14 days.
What does the court ruling mean for Ripple?
Ripple’s recent legal blow is worrying existing and potential investors about too much regulatory interference. The ongoing lawsuit has already put off some investors worried about the impact the case will have on the company’s plans and future. The legal battle not only slows down the planned development, but could also deter potential investors.
The Ripple vs. the SEC case has drawn a lot of attention not only from the Ripple community but also from the international community as it is the first legal case of its kind. The final verdict is expected to give precedence to future legal proceedings related to cryptocurrencies. The main objective of the case continues to be to determine whether the XRP is a security or a transaction.
Ripple argues that XRP is a cryptocurrency, just like ETH and Bitcoin. Still, the SEC argues that the aforementioned cryptocurrencies did not have a central institution that benefited from their introduction. Ripple had previously criticized the SEC for failing to issue a fair warning of violations of security laws for XRP transactions in the first few years after its launch.
Ripple’s goal is to work with banks to enable faster transactions over the Ripple network. Such collaborations would secure Ripple’s role and influence in the banking industry, but the ongoing litigation threatens such partnerships. It has already partnered with over 300 financial institutions to provide affordable, real-time cross-border transfers. An unfavorable court decision would likely discourage investors and partners, especially in the banking segment, and thus thwart Ripple’s plans, which is why the court decision is critical to the future of the project.
The court ruling has already hurt the performance of XRP, whose price has plummeted in the past 12 hours due to declining investor confidence and uncertainty about Ripple’s future. XRP is already down more than 22% in the past 24 hours and has continued to decline more than 35% in the past seven days.
Source – Binance
Ripple’s current troubles appear to have watered down attempts to hit its previous high of $ 1.88 that it hit on April 13 this year. Wednesday’s crypto sell-off pushed it to a low of $ 0.85, where it rebounded after testing resistance. There was some rebound on Thursday, but news of the SEC’s victory has created more uncertainty, reflecting XRP’s declining performance on Friday morning. Fortunately, it has experienced limited selling pressure indicated by volume.