XRP rally likely as SEC appeal does not contest legal clarity of Ripple’s token
- XRP traders around $0.55 on Friday, gains less than 1% on the day.
- SEC’s appeal in Ripple lawsuit is now publicly available and does not raise a question on the altcoin’s legal status.
- SEC vs. Ripple lawsuit’s July 2023 ruling provided non-security status to XRP, SEC appeal leaves it out of the legal arguments.
Ripple (XRP) gains on Friday as traders digest the developments in the Securities & Exchange Commission’s (SEC) appeal against the final lawsuit ruling. In August 2024, Judge Analisa Torres imposed a $125 million fine on Ripple for their institutional XRP sale and the altcoin’s non-security status in exchange-based transactions was maintained.
XRP is trading around $0.55 early on Friday.
Daily Digest Market Movers: SEC appeal in Ripple lawsuit leaves out XRP
- The US SEC has contested the final ruling in the Ripple lawsuit, the appeal documents were made publicly available on Friday.
- Documents confirm that the SEC has not commented on the legal clarity of XRP, the native token of the XRP Ledger.
- XRP token remains a non-security in transactions on exchange platforms, per Judge Torres’ July 2023 ruling.
- XRP traders digested the recent developments in the lawsuit and rejoiced as the altcoin retains its legal clarity and this likely paves the way for approval of XRP Exchange Traded Funds (ETF) in the US.
Technical analysis: XRP could gain 10%
XRP broke out of its downward trend on August 9, 2024, since then the altcoin has been rangebound. XRP could gain nearly 10% and test resistance at $0.60, the psychologically important level for the token.
The Relative Strength Index (RSI) reads 47.41, under 50. The Moving Average Convergence Divergence (MACD) indicator flashes green histogram bars above the neutral line, meaning there is underlying positive momentum in XRP price trend.
XRP/USDT daily chart
XRP could find support at the August 5 low of $0.5319, or the July 5 low of $0.3843, if there is a correction in XRP price.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14, 2023: 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 had to pay a $125 million civil fine.
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 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.
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.
