- SEC vs. Ripple lawsuit ended in a $125 million fine for securities law violation by the payment remittance firm, however both parties consider it a win.
- Ripple noted a massive spike in XRP price after the ruling, but the rally fades as traders digest the likelihood of SEC appeal.
- XRP slips under key psychological support at $0.60, erasing 7% of its value on Friday.
The US Securities & Exchange Commission (SEC) vs. Ripple lawsuit ended after a long-drawn legal battle with the court asking the firm to pay $125 million in fines. Judge Analisa Torres noted that the firm is likely to violate federal securities laws if it hasn’t already, raising concerns about an SEC appeal.
XRP suffered a correction on Friday, down to $0.5778 at the time of writing.
Daily Digest Market Movers: XRP could lose legal clarity if SEC appeals ruling
- XRP retains its status as a non-security, with Judge Analisa Torres making no change to the July 2023 ruling in the final lawsuit outcome.
- Eleanor Terret, a journalist at Fox Business, however, believes that the SEC has reason to appeal the ruling on XRP’s status as a security.
- While Judge Torres’ ruling cements XRP's status as a non-security in secondary market sales, if the SEC appeals, this could affect the sentiment of traders.
NEW: I reached out to the @SECGov for comment on the @Ripple ruling and a spokeswoman gave me this statement:
— Eleanor Terrett (@EleanorTerrett) August 8, 2024
“The Court granted the SEC's motion for remedies including an injunction barring Ripple from committing additional violations of the securities laws and significant… https://t.co/TC2xk7pBD2
- With XRP’s legal clarity analysts expected news of an Exchange Traded Fund (ETF) application soon.
Ripple/XRP-Stuart Alderoty-Is The Ripple Case Over?, 21 Shares- When XRP ETF?#DigPerspectives
— Digital Perspectives (@DigPerspectives) August 9, 2024
Includes Paid Promotion pic.twitter.com/4rtSUWGyP0
- The SEC is unlikely to appeal the fine imposed on the firm since it is nearly twelve times the amount that Ripple offered to pay.
- XRP erased recent gains from the lawsuit ruling and dipped under the key psychological support level at $0.60.
Technical analysis: XRP erases gains and extends losses by 7%
XRP is in a multi-month downtrend per the daily chart. The altcoin erased gains from the lawsuit victory and suffered a correction on Friday. XRP lost 7% value on the day and dropped under key support at $0.60.
XRP Ledger’s native token could extend its losses further by another 10% and collect liquidity in the Fair Value Gap (FVG) between $0.5188 and $0.5785. Ripple could find support at the upper and lower boundary of the FVG.
XRP/USDT daily chart
A daily candlestick close above $0.60 could invalidate the bearish thesis, and XRP could rally towards the $0.6602 target, the 50% Fibonacci retracement of the decline from July 13, 2023, to July 5, 2024.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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