XRP Lawsuit: What’s the Verdict?

The high-profile lawsuit against XRP has yet to be decided, but a verdict in the crypto’s favour could send the price sky-high in 2022.

| More on:
think thought consider

Image source: Getty Images

Ripple’s (CRYPTO:XRP) national token is among the decentralized digital currencies circulating in the cryptocurrency market. XRP has a loyal following, although its community is still hoping for wider adoption and exponential growth. The crypto runs on a digital payment network called RippleNet.

The purpose of the founders was for XRP to serve as an intermediate mechanism of exchange between two currencies or networks. When Ripple Labs took over in September 2013, it courted major banks and financial services firms to hop on the global payments network. The main selling point was speedy confirmation of transactions or within seconds at very low costs.

Unlike Bitcoin, XRP isn’t an energy hog as its consensus system consumes very little amount of energy. The price soared to as high as US$3.37 on January 7, 2018, but the crypto has since experienced more dips than spikes. As of March 19, 2022, the price of one token is US$0.819. Breaking the US$1 mark is elusive as ever because of a thorn on Ripple’s side.

SEC lawsuit

On December 22, 2020, a dagger hit the financial startup. The U.S. Securities and Exchange Commission filed a lawsuit against Ripple Labs and two of its senior executives. The regulatory body alleged the defendants traded US$1.3 billion worth of their cryptocurrency as a security but didn’t register them first.

The SEC classifies XRP as a security since it was used to finance a platform that facilitates money transfers for retailers. Ripple Labs and the concerned executives also made money from the sale. According to the SEC, the securities should have been registered with the commission along with the disclosure of certain financial information for public consumption.

The SEC’s purpose for the requirements is to counteract fraud and protect investors’ interests. Instead of complying with the demands, Ripple opted to engage the SEC in a legal battle. The company describes the case as biased against cryptos and an assault on Ripple.

Furthermore, the defendants wondered about the belated case when SEC filed after billions of XRP tokens had circulated on global cryptocurrency exchanges for seven years. It didn’t make a determination nor give specific clarifications during the period.

Ripple knew the lawsuit will hurt the token and protested saying, “The SEC has introduced more uncertainty into the market, actively harming the community they’re supposed to protect.” Large crypto exchanges like Coinbase and Bitstamp delisted the token. XRP went on a freefall thereafter, crashing to as low as US$0.221 on January 2, 2021.

Flawless for Ripple

The case is more than one year old and the legal tussle between the SEC and Ripple is still ongoing. Despite the high-profile lawsuit, XRP is the sixth-largest cryptocurrency by market cap. As of this writing, Ripple’s market cap is US$38.8 billion. It’s higher than Ethereum-killers Terra, Cardano, and Solana.

Judge Analise Torres recently denied the SEC’s motion to strike the fair notice defense. Attorney Jeremy Hogan, a Partner at Hogan & Hogan law firm, said “If the Fair Notice defense survives and Ripple wins, the SEC will have an uphill battle winning any lawsuits they bring.”

Market Haven has a bullish market outlook for XRP. The crypto assets prediction platform said this year will be flawless for Ripple. Once the controversy ends and the verdict is in its favour, the price could reach as high as US$20.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin, Ethereum, and Terra.

More on Cryptocurrency

cryptocurrency, crypto, blockchain
Cryptocurrency

Is Hut 8 Stock a Buy in December 2022?

Hut 8 Mining Corp. (TSX:HUT) stock has been throttled in the face of a crypto bear market. It still looks…

Read more »

cryptocurrency, crypto, blockcahin
Cryptocurrency

HIVE Blockchain Stock Fell 18% In October – Is It Time To Buy? 

Hive Blockchain (TSXV:HIVE) stock is down with the crypto market but ready for a BTC rebound.

Read more »

crypto, chart, stocks
Cryptocurrency

2 Top Cryptocurrencies to Buy in October 2022

Ethereum and Solana are two of the most popular cryptocurrencies in the world that are well poised to deliver substantial…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Cryptocurrency

2 Cryptocurrencies to Buy for Potential Recovery

The largest and most liquid cryptocurrencies may not always be the first to recover, and you may have to go…

Read more »

Senior couple at the lake having a picnic
Tech Stocks

3 TSX Stocks That Are Great Long-Term Picks

October is a ripe time to buy growth stocks for wealth creation. Use the market downturn to tap the recovery…

Read more »

cryptocurrency, crypto, blockchain
Tech Stocks

Sinking Crypto Stock: Is Hut 8 (TSX:HUT) Worth Buying at $2.30?

A prominent crypto stock trading at an absurdly cheap price, but you must have a high-risk appetite to consider buying…

Read more »

sad concerned deep in thought
Cryptocurrency

Is Coinbase Stock a Good Bet for Cryptocurrency Investors?

Coinbase stock is down 80% from all-time highs, but the U.S.-based cryptocurrency exchange is still one of the largest platforms…

Read more »

Big Bitcoin logo.
Cryptocurrency

Will Bitcoin Ever Shift to a Proof-of-Stake Model?

Following Ethereum's (CRYPTO:ETH) Merge, will Bitcoin (CRYPTO:BTC) adopt a proof-of-stake consensus mechanism or stand pat?

Read more »