XRP and SEC Lawsuit: Impact on Ripple's Future

The Ride of XRP: From Soaring Heights to Plummeting Depths

Back on November 24, XRP flirted with a value of over $0.90 on U.S. exchange Coinbase. Enthusiastic supporters were ready to pop champagne and get their party hats on, dreaming of new highs—maybe even a return to January 2018’s staggering peak of over $3. But somewhere between hopes and reality, the SEC lawsuit against Ripple crashed the party, bringing more than a hangover worth of regret.

The SEC’s Dagger: What’s the Lawsuit About?

To put it plainly, the SEC argues that XRP is, and always was, a “security.” Since 2013, Ripple (the company behind XRP) has allegedly been selling it without registering with the SEC. Think of it as selling a really popular dessert at a bake sale, but you forgot to file for a business license. That’s where things get sticky.

According to the SEC, Ripple capitalized over $1.38 billion from XRP sales.
Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen are in hot water, liable for their hefty role in illegal sales.

In a dramatic twist, just when things were starting to calm down, XRP’s value tanked by a staggering 24% within a day after the news broke. Ouch! But wait! On December 25, a Christmas miracle occurred: XRP bounced back by about 40%. Yet, traders should remember, Santa isn’t here to save the day forever.

Legal Drama: Where Is the Trial Headed?

In case you didn’t know, the SEC decided to bring Ripple’s case to a New York federal court, even though Ripple is based in California. How did that happen? Ripple has an office in New York and made some bold claims about XRP while sunbathing in the state. Legal drama aside, the lawsuit targets Garlinghouse and Larsen on a personal level, putting them in the spotlight with allegations that could sink their ship.

“We hope a clear precedent and framework emerge from these proceedings,” remarked Ben Zhou, CEO of ByBit, on the unfolding chaos.

What’s at Stake if the SEC Wins?

If the SEC comes out on top, it could mean serious trouble for Ripple. The lawsuit seeks to recover Ripple’s funds obtained through what the SEC calls illegal sales, and it aims to permanently ban all payout opportunities for Garlinghouse and Larsen. They’re essentially being told: “You’ve had your dessert, now hand it back!”

The SEC claims XRP passes the Howey test—meaning it meets the criteria to be classified as a security.
They’re also looking for an unspecified civil penalty, which sounds as mysterious as it is daunting.

As the SEC Turns: What Lies Ahead for Ripple?

At a time of transition, as SEC Chairman Jay Clayton steps down, the future of the lawsuit feels more uncertain than ever. Even former SEC Commissioner Joseph Grundfest acknowledges the unprecedented nature of this case. “No pressing reason compels immediate enforcement action,” he stated. How very diplomatic!

Garlinghouse has vowed to take the fight to the court, opting to battle the SEC rather than opt for an easy settlement. Here we have a protagonist in a legal thriller—who knows how this will end?

For now, XRP struggles below the $0.30 mark, reflecting a nearly 50% decline over a single week. As investors watch the rollercoaster with bated breath, one thing is for certain—the ripple effect of this lawsuit will be felt across the crypto space.