The Crypto Story

The crypto market never stands still. New kinds of assets constantly emerge, such as altcoins, stablecoins, and other project tokens. But every few years, a new...

The Crypto Story
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There’s a lot of buzz about XRP, what is it?

XRP is a digital asset that serves as a bridge currency for cross-border transactions on the Ripple network. It was launched in 2012 by Ripple Labs Inc. to provide a fast, low-cost, and efficient way to transfer value globally. XRP can be used to pay transaction fees and settle transactions between different currencies. The token gained popularity among investors due to its potential to revolutionize the traditional banking system. Its main use-case is for remittances and could be the future of how value is transferred for migrant workers around the world. As XRP sees a significant 40% surge in March - now is a good time to look deeper into the token.

But, wait, what is Ripple? And how does it relate to XRP?

Ripple is a San Francisco-based company that developed the RippleNet, a payment protocol designed to simplify cross-border payments. XRP is closely associated with Ripple, as it serves as the bridge currency for transactions on RippleNet. However, it is important to note that XRP is not owned by Ripple, nor is it the only digital asset used on RippleNet.

XRP's all-time high was reached in 2018, when it peaked at $3.84 USD. Since then, its value has fluctuated, with its price being heavily influenced by the ongoing lawsuit filed by the SEC against Ripple Labs.

What? A lawsuit? Tell me more…

In December 2020, the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs, alleging that the company had conducted an unregistered securities offering through the sale of XRP. The SEC claims that Ripple's sale of XRP represents an unregistered securities offering, which violates securities laws. The SEC alleged that the company had raised over $1.3 billion through unregistered ongoing digital asset security offering.

The SEC complaint stated that Ripple co-founder Christian Larsen and current CEO Bradley Garlinghouse raised capital to finance the company’s business through the sale of XRP, where billions of XRP were distributed in exchange for non-cash consideration, labor and market-making services. Both executives, according to the complaint, also sold $600 million worth of XRP through unregistered sales - in violation of federal securities law.

What is the latest update on Ripple Labs and XRP

In a significant ruling, US District Judge Analisa Torres in New York has determined that Ripple Labs Inc.'s token, XRP, qualifies as a security when sold to institutional investors but not to the general public. This decision is seen as a victory for the crypto industry over the Securities and Exchange Commission (SEC). The judge stated that the sales of XRP to sophisticated investors met the criteria for an investment contract under federal securities law. However, she clarified that this classification did not extend to programmatic investors, implying the broader public purchasing crypto on secondary markets. The judge highlighted that there was no evidence to suggest that such investors could fully comprehend Ripple's statements about XRP, as some of the statements cited by the SEC may not have been widely shared.

What happened to the price of XRP?

Following the ruling on secondary-market crypto sales, XRP experienced a significant surge in value, rising by approximately 80% on Thursday. Industry figures and experts have hailed this ruling as a victory, as it addresses the longstanding question of whether cryptocurrencies should be classified as securities. The crypto industry has argued that it operates outside the jurisdiction of regulatory bodies like the SEC. The judge's decision regarding secondary-market crypto sales is seen as a positive development in this ongoing debate.

Has the SEC responded?

The ruling led to a surge in XRP's value, and industry experts viewed the decision regarding secondary-market crypto sales as a win. The SEC's pursuit of unregistered securities sales has been a focus of the agency, with recent actions against other crypto firms. The SEC has not yet commented on the ruling.

Any final thoughts?

The decision is considered significant for the digital asset industry and may impact future classification of tokens, including the ongoing SEC lawsuit against Coinbase. The SEC sued Ripple and its executives in December 2020, accusing them of misleading investors by selling over $1 billion worth of unregistered XRP tokens. The case will continue regarding institutional sales, but any trial may face delays due to potential appeals.