Ripple Vs. SEC Lawsuit: Here’s Everything You Need to Know

These days, Ripple is one of the most prominent cryptocurrency platforms by market capitalization, used as a bridge by banks, payment providers, digital asset exchanges, and corporations that exchange value between all kinds of money. XRP is the native token of the open-source XRP ledger, led by a global community of businesses and developers. As of May 26, 2024, one XRP was worth $0.529478, and, based on the XRP price prediction 2030, it may increase by 5% and reach $0.709551, looking forward to a favorable ruling in the ongoing Ripple-SEC lawsuit.

As we can all remember, the watchdog of the U.S. financial system sued Ripple (and two of its executives) in 2020, when XRP was the third-largest cryptocurrency by market capitalization, for having breached the securities laws by selling its native cryptocurrency to investors. On July 13, 2023, the court determined that XRP isn’t a security when put up for sale on a public exchange but is a security when sold to institutional investors. The bottom line is that the SEC seeks $2 billion from Ripple in total fines, while the technology company argues it’s accountable for paying civil penalties that don’t surpass $10 million.

The Court’s Ruling Doesn’t Just Impact Ripple, But Also the Cryptocurrency Industry

The SEC vs. Ripple case puts XRP under the microscope, impacting operations and the token’s market value, so the consequences can be felt by millions of users worldwide. A court ruling was anticipated in May 2024, but as you see, there’s no update; the resolution between disputing parties can lead to a renewed surge in XRP demand or a sharp devaluation in price. The penalty for breaching the laws that govern securities isn’t likely to affect the cryptocurrency industry, but the U.S. regulator’s plan to appeal the programmatic sales ruling by Judge Analisa Torres can create market tension, having a basis for ruling via enforcement.

The SEC’s lawsuit against Ripple is one of the most important disputes between a cryptocurrency company and regulatory authorities, hindering innovation and growth in the sector. XRP is considered security only when sold to institutional investors, which only goes to show the complexities of regulating this asset class, different from traditional asset classes (equities, bonds, and cash), and makes us believe additional legal battles are imminent. The watchdog of the U.S. financial system wants to regulate cryptocurrency trading to protect investors from those wishing to take advantage of them, so even a partial win against Ripple may be what it takes to set the ball rolling.

XRP, And Cryptocurrencies in General, Isn’t A Security for Retail Investors

According to the SEC, Ripple executives held an initial public offering (IPO) of XRP, offering tokens without first registering with the agency and suggesting to those interested that XRP would be a profitable investment. Ripple denies having engaged in the offering of XRP and insists the token’s functionality and liquidity are incompatible with the Blue Sky laws. What’s more, Ripple says that treating XRP as a security would force countless exchanges, market-makers, and other actors in the blockchain sphere to adapt to lengthy, complex, and big-budget regulatory requirements that were never meant for virtual currencies.

The SEC sued Ripple and its current and former CEOs just before the 2020-2021 cryptocurrency bull market, when Bitcoin reached an all-time high price of $64,000, while XRP experienced a long period of depression. If you take a closer look at the daily charts, you’ll undoubtedly see that XRP’s price is presently marked by minimal volatility and unclear momentum, which suggests uncertainty among traders. It could be the calm before the storm. Projections hint at a positive path for XRP in 2024 but don’t provide a definite guarantee, meaning that much depends on the outcome of the Ripple and SEC legal battle – and no one knows how the case will end.

Based on the Howey Test, created by the Supreme Court to determine whether certain transactions qualify as investment contracts, Ripple is a security only if offered to institutional (or professional investors) because money is invested, there’s an expectation to earn a profit, investing is a common enterprise, and profits are generated through others’ efforts. Simply put, Ripple received money for XRP, and the court demonstrated there was a pooling of assets, with the fortunes of institutional buyers being linked to the success of the enterprise and that of other investors. XRP purchasers hoped they would derive profits from Ripple’s efforts, relying heavily on evidence from their marketing campaigns.

XRP Holders Aren’t Sure the Altcoin Will See an ETF Approval In 2025

Though market participants foresee the end of the “endless war,” it’s necessary to be realistic and admit the Ripple vs. SEC lawsuit won’t be resolved this year; there are additional possibilities for confrontation, so it’s not clear whether the judgment will stick. Meanwhile, Ripple’s XRP could be next in line to become a spot ETF, but not until 2025. Spot ETFs offer many benefits, such as ease of access, direct exposure to the real-time pricing of the underlying asset, and price appreciation potential, to name a few. As far as the XRP community is concerned, it’s divided on the issue, with roughly 40% of token holders believing spot XRP ETFs won’t receive the green light.

Key players of the cryptocurrency ecosystem are excited about the prospect of a spot XRP ETF, which smoothens the path by eliminating barriers to institutional engagement and puts things for future developments in the investment landscape. Of course, there are always going to be skeptics. Legal analyst Bill Morgan, for instance, is convinced XRP’s value ought to be driven by its utility and ubiquitous adoption as a means of payment instead of counting on institutional investment. At a time when many thought the SEC would deny all spot Ethereum ETF applications, people are now discussing which asset will follow after, and XRP is the clear winner.

Last Words

The resolution can lean in Ripple’s favor, but let’s not forget the SEC is ruthless, and it’s going to come down hard on the company behind XRP; it won’t settle quietly.