Ripple vs SEC Case & its Consequences on The Crypto Industry

The infamous SEC vs. Ripple case has been ongoing since December 2020; it could have severe consequences for the crypto industry. If the financial watchdog of the United States, the Securities and Exchange Commission (SEC), wins the case and XRP is proven as a security, then Ripple needs to register with the SEC. 

Also, every other issuer would soon have to line up for registration; this way, the agency would inadvertently gain control over the crypto industry. 

Ripple vs. SEC Case & Its Consequences

The legendary case is closely monitored and would affect 75,890 XRP holders. It is considered one of the most prominent cases between the authorities and a crypto company. The case can potentially shape crypto assets’ future in the United States. 

Court has already barred Ripple from accessing the XRP reserves. Because of this scenario, many exchanges had to delist XRP from their platforms, causing a steep drop in price and trading volume. Considerably a significant blow to XRP’s liquidity. 

When the lawsuit news surfaced, the XRP prices touched the floor. Since then, the crypto company has been facing hard times attracting customers, and its investors have incurred heavy losses. The U.S. is among the primary markets for Ripple, its home turf, and essential for its long-term success. 

The trial would have a significant impact on the systematic development of securities. It would also affect crypto companies’ business models, initial coin offerings (ICOs), and funding strategies. It is changing the entire demographic. 

Ripple could be ordered to pay massive penalties if the financial watchdog wins. Also, federal law could see the crypto through a different lens post-verdict. Crypto tokens and currencies would be re-evaluated and brought under the definition of securities.  

It is well known that the current regulations are designed for traditional securities, and digital assets do not fall under the same category. Still, by using the securities act of 1933, the agency is trying to bring them all under one umbrella and rebrand them.

However, analysts feel that the possibility of the SEC winning the case is scarce. Therefore the verdict could bring the much-awaited rally in XRP price action. XRP whales have increased by over 1% since February 2023. 

Ripple vs. SEC – A Brief History

The SEC filed a lawsuit against Ripple Labs Inc., co-founder and executive chairman Christian Larsen, and current CEO Bradley Garlinghouse for raising around $1.3 Billion by selling XRP, which the agency believes is unregistered security. 

Ripple raised funds by selling XRP to raise funds since 2013; the buyers were promised yields in return. SEC feels that the scenario, per the law, makes their token a security. Conversely, Ripple claims that XRP is not a security but a cryptocurrency and does not fall under SEC jurisdiction. 

In 2012 Ripple started as a fintech company, but in 2013, they expanded and launched the native cryptocurrency XRP. They sold these digital assets to raise funds for the company. The action looked like an initial public offering (IPO). This attracted the attention of the SEC, which led to a lawsuit filing. 

Ripple has spent around $100 Million in fighting this legal battle. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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