Ripple price soars 20% as SEC case nears verdict

·4 min read
A representations of cryptocurrency Ripple is seen in front of a stock graph and U.S. dollar in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration
The legal battle between the SEC and Ripple is slowly drawing to a close. Illustration: Dado Ruvic/Reuters

The cryptocurrency market cap rose by 2% today, with major altcoin ripple roaring past bitcoin in terms of daily gains, as investors await a verdict in the ongoing case between XRP and the Securities and Exchange Commission (SEC) in the US.

The global cryptocurrency market cap stood at $1.23tn today, a 2.0% rise in the last 24 hours, according to Coingecko.

Bitcoin (BTC-USD) has held above $28K, now standing at $28,325, up 2.3% in the past 24 hours, and ethereum (ETH-USD) rose 3.3% in the past 24 hours to $1,800.

Of the major altcoins, ripple (XRP-USD) has soared 20% in the past 24 hours to $0.46.

Ripple has led today's rally in crypto, with XRP aficionados stock piling the cryptocurrency ahead of a ruling in a long-running court case between the SEC and the Ripple company.

If Ripple win the case it will establish a critical precedent for the cryptocurrency industry.

Late in 2020 the SEC charged Ripple network with selling unregistered securities – after it sold $1.3bn of its cryptocurrency.

Ripple immediately contested the charge and now a verdict is imminent on the case that has been conducted in a New York court.

Read more: Crypto live prices

If the court finds that Ripple’s XRP token should be classified as a security, like a bond, equity or derivative, it could have a detrimental effect on nearly every other cryptocurrency, apart from bitcoin, as they would be subject to far greater regulation than now.

A win for the SEC would boost the regulator's assertion that bitcoin is the only digital asset that is not a security, and that all others, including blue-chips such as ethereum and cardano, are unregistered securities.

The entities that organise and issue cryptocurrencies would risk fines for operating financial products that are unregistered securities, and cryptocurrency projects would need to file with the SEC to await registration as a security before they could operate in the US.

The SEC use the Howey Test, first introduced in the 1920s, to discern what is and isn't a security. The Howey Test describes a security as a financial product that receives, "investment of money, in a common enterprise, with a reasonable expectation of profits, to be derived from the efforts of others".

Read more: Crypto and tax: What has changed after the budget?

Chief legal officer at Ripple Stuart Alderoty says the company is certain that XRP doesn't meet any of the Howey criteria, stating that there is 'no common enterprise' or group undertaking whose efforts affect value of the cryptocurrency.

Marc Fagel, former regional director of the SEC’s San Francisco office speaking to Fox Business said: "On the core legal issue of whether Ripple offered unregistered securities to the public, I think the SEC has the stronger argument.

"The case is complicated by the question of whether ripple had ‘fair notice’ that XRP was a security.

"Even there, I don’t see a compelling argument under legal precedent, even if missteps by the SEC along the way have brought it to the forefront."

Possible outcomes for price of Ripple XRP

Brad Garlinghouse, Ripple’s CEO, said the business will not be affected if the SEC win the case, as they could move offshore.

He said: “Most of our customers are non-US customers by a long shot and so we could absolutely continue to build the business and grow.

Read more: Ripple vs the SEC

"It’s just we would no longer be a US taxpayer where we paid probably a couple hundred million dollars in taxes here in the United States.

"It doesn’t serve the US agenda to drive us offshore.”

If Ripple do succeed in overturning the charge levelled by the SEC, lead trial attorney Andrew Pickett told the Finbold news outletyhyh: “If Ripple is successful in their lawsuit, it could help solidify XRP’s legality in the US market, which would benefit its price.”

Ben Armstrong 'aka Bitboy Crypto' on the XRP price and the SEC case

Popular crypto YouTuber Ben Armstrong spoke on Yahoo Finance's The Crypto Mile and advised XRP holders not to bet on the price of Ripple shooting to an all-time high when the case ends.

He warned: "This is not going to happen."

If Ripple wins its case against the SEC, he said: "Number one, XRP will go back out on all the exchanges, as regulated exchanges in the US currently do not list XRP.

"This will be big because the interest will come back in the run-up to a new crypto bull-run. There will then be more liquidity and options for people to buy XRP.

"The price will certainly go up, you could see it go up to maybe $1.20, and then it will probably drop to about $0.70.

Watch: US Senator: 'Digital assets will be as big as the internet itself' | The Crypto Mile

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