XRP’s Rise Amid Ongoing SEC Dispute
Despite the US Securities and Exchange Commission’s (SEC) ongoing efforts to classify XRP as an unregistered security, the cryptocurrency’s price has surged over 15%, exceeding $3.
Background on the SEC’s Appeal
In 2020, the SEC charged Ripple Labs, the company behind XRP, with raising over $1 billion through the sale of XRP tokens, which the SEC classified as an unregistered security. A court ruling in July 2023 determined that some XRP sales to retail investors did not violate securities laws, while others to institutional investors did. Ripple was ordered to pay a $125 million fine for the latter.
The SEC has now filed a formal appeal to have the court’s ruling overturned, arguing that XRP sales to retail investors should be classified as unregistered securities transactions.
The Howey Test and SEC’s Arguments
The SEC has cited the Howey test, a legal criterion used to determine whether a transaction qualifies as an investment contract and is subject to federal securities laws. The regulator argues that Ripple’s promotion efforts created an expectation of profit among investors, making XRP an investment contract.
The SEC also claims that XRP given as compensation to employees and in business should be classified as a security.
Ripple’s Response and Industry Expectations
Ripple CEO Brad Garlinghouse and legal director Stuart Alderoty have expressed confidence that the SEC’s appeal will be unsuccessful, with Alderoty stating that the agency’s lawsuit is “just noise” and that a new era of pro-innovation regulation is coming.
Industry participants expect the next administration to end or establish settlements for the SEC’s ongoing legal disputes against digital asset companies.
XRP’s Price Movement
Despite the ongoing SEC dispute, XRP’s price has surged over 15% in the last 24 hours, reaching a 7-year high above $3. The cryptocurrency’s market capitalization has also reached a record $182 billion.
Edited image of Unsplash
WARNING: This is an informative article. It does not promote, endorse or recommend any particular investment. Investments in cryptoassets are not regulated in some countries and may not be suitable for retail investors as the entire amount invested could be lost. Check the laws of your country before investing.