XRP struggles below $0.50 as SEC grants Ethereum yet another free pass
- Ripple proponents have called out the SEC for dropping its investigation into Ethereum.
- Consensys, an Ethereum developer, shared the news of the regulator’s response to a letter.
- XRP is back under the $0.50 resistance in response to Ethereum’s free pass.
XRP trades back below $0.50 on Wednesday as Ripple (XRP) proponents like attorney Bill Morgan have lashed out at the Securities and Exchange Commission (SEC) for what is being considered a “second free pass” for Ethereum.
Ethereum developer Consensys announced on Wednesday in its official X account that the SEC is putting an end to its investigation into the second-largest cryptocurrency. The developer had enquired the status of the investigation through a letter sent to the regulator and received a response.
Daily digest market movers: SEC free pass to Ethereum angers XRP community
- The SEC’s decision to end the investigation into Ethereum has caused a stir in the Ripple community.
- The US financial regulator is embroiled in a legal battle with the cross-border payment remittance firm since 2020, alleging that Ripple sold unregistered securities through the XRP token. The SEC demands the court to impose $2 billion in penalties for Ripple.
- Ripple attempted to draw parallels between other crypto litigation, like the SEC’s lawsuit against Terraform Labs and its founders, to reduce the amount of the fine. This attempt was rejected by the regulator, but it opened the door to a significantly smaller penalty of around $102 million.
- For years, the XRP holder community has slammed the SEC for what is deemed “unequal” treatment of Ripple compared to its peers. Community members have criticized the agency for bringing a lawsuit against Ripple while Ethereum gets a “free pass.” History repeated itself with the SEC pulling a stop on its investigation into Ether.
- While the closing of the investigation marks a win for the Ethereum holder community, Ripple proponent attorney Bill Morgan has slammed the SEC for different treatment of Ethereum and Ripple for the second time in six years.
Ethereum’s second free pass from the SEC almost exactly 6 years after the Hinman free speech.
— bill morgan (@Belisarius2020) June 19, 2024
Ethereum’s and Ripple’s different treatment will forever show how arbitrary the SEC has been in crypto. https://t.co/Coxf6czO9r pic.twitter.com/WNcacVYhNE
Technical analysis: XRP plunges below $0.50 yet again
Ripple price has declined steadily since mid-March. The altcoin closed above the sticky resistance at $0.50 for the first time in ten days on Monday, but it is back under this key level following the news of SEC dropping its investigation into Ethereum.
In case of further selling pressure, XRP risks a 5% decline to the April 19 low of $0.4665, a key support level for Ripple.
XRP/USDT daily chart
However, if XRP sees a daily candlestick close above $0.5330, the resistance and June 5 high, it could invalidate the bearish thesis. In such a scenario, the token could climb towards the Fair Value Gap extending between $0.5491 and $0.6029.
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.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
