SEC vs. Ripple lawsuit sees redacted filing go public, XRP dips to $0.51
- Ripple lawsuit develops further as redacted version of SEC filing goes public.
- Ripple, SEC and related parties will file motions to seal material from the remedies-related filings by May 13.
- XRP wipes out gains since Monday and dips to a low of $0.51, early on Wednesday.
Ripple (XRP) dipped to $0.51 low on Wednesday, erasing its gains from earlier this week. The Securities and Exchange Commission (SEC) filing is now public, in its redacted version. Ripple and the SEC have completed their filings and brought supporting evidence, the lawsuit moves to the next phase where related parties file omnibus letter motions.
The motion will seal or redact remedies-related filings and supporting evidence by the May 13 deadline.
Daily Digest Market Movers: Ripple and SEC head to next phase of the lawsuit
- Ripple and the SEC have completed their remedies-related filings and redacted versions have been made available to the public.
- There are two key issues that the regulator and the payment remittance firm address in recent lawsuit filings.
- First is SEC’s allegation that Ripple sold unregistered securities (XRP) to institutional clients, pre and post lawsuit, for which the regulator demands $2 billion in penalties.
- The second issue is Ripple’s counter of $10 million in fines, in its filing the payment remittance firm argues that the SEC’s demand for $2 billion is unfair and cannot be explained.
- The regulator has dropped its lawsuit against Ripple executives Brad Garlinghouse and Chris Larsen, and introduced comments from SEC Chief Assistant Accountant Andrea Fox, on the firm’s financial statements.
- In its latest filing, the SEC addresses Ripple’s defense of its institutional XRP sales, and conduct pre and post complaint.
- The SEC slams Ripple for its counter of $10 million and notes that low penalty may not deter the firm from future large-scale capital raises without registration.
- The court is expected to rule on the issue of penalties in May.
Technical analysis: XRP extends losses, dips to $0.51
Ripple could extend its losses by another 3.35% from the current price of $0.5217, down to $0.5045. This level is the 38.2% Fibonacci retracement of Ripple’s decline from April 9 top of $0.6431 to April 13 low of $0.4188.
May 1 low of $0.4782 could act as support for XRP in the event of further decline.
While the histogram bars on the Moving Average Convergence Divergence (MACD) indicator are above the neutral line, it points at waning positive momentum.
XRP/USDT 1-day chart
A daily candlestick close above $0.5310, the 50% Fibonacci placeholder could invalidate the bearish thesis. XRP could face resistance at the $0.5574 level, the 61.8% Fibonacci retracement of the decline between April 9 and 13.
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.