XRP crashed by about 40% since yesterday, from $0.5 to $0.3 with the currency slightly recovering.
That’s after a downwards plunge since November 24th when it reached $0.8 (pictured above), with it unclear whether that’s when indication of a SEC lawsuit was first known.
The Securities and Exchanges Commission officially charged Ripple yesterday, stating:
“The SEC’s complaint, filed today in federal district court in Manhattan, charges defendants with violating the registration provisions of the Securities Act of 1933, and seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties.”
That led to a sell off in XRP, insta plunging 14% before continuing downwards to its big support line of $0.3.
Curiously this also affected eth, which fell by 7% from about $640 to a brief $593 before somewhat recovering.
Bitcoin also fell from heading to $24,000 to $22,800 from which it seems to currently be rising.
This might suggest that XRP holders are not quite going to bitcoin or eth, but to the dollar. Perhaps waiting to buy the dip.
Something that would indicate XRP-ers are a different ‘species’ that maybe don’t quite see bitcoin and eth as a better alternative than waiting out the dip.
Thus XRP might be brining in different sorts of people than bitcoin or eth, people that maybe don’t quite mind a bit of centralization or corporate steering.
In which case it isn’t clear why they wouldn’t find it better to be classified as a security, something that would regulate XRP and therefore make it more trustworthy for potential future investors.
As its value proposition is quite different from bitcoin and eth, getting that SEC stamp would make it stand out as it would be the first crypto to be SEC regulated.
Ripple Incorporated itself is worth some $10 billion, so they can easily get some lawyers to deal with all the paperwork to satisfy SEC.
Coinbase moreover can sell securities, so XRP’s markets wouldn’t be affected too much or at least not more than the current price action has affected it with Synthetix stating:
“iXRP has reached its upper limit and been frozen. It will need to be redeployed with new limits by the protocolDAO, we will announce when this is done.”
iXRP is their short token which XRP-ers have now broken by too much shorting, so a new smart contract now needs to be redeployed.
As XRP can easily be traded on these decentralized exchanges and on Coinbase in a regulated manner, this SEC action might not make much negative difference, while potentially adding value due to the token being regulated.
Hence it isn’t very clear why Ripple isn’t just filing for the necessary paperwork with it probably very difficult for them to persuade the court this isn’t a security considering they hold 50% of all XRP.
The lawsuit in addition relates to only $1.5 billion, but asks for disgorgement, that means the act of giving up something.
Just what this translates to in practice is not clear as a sensible judgment would be some small penalty considering the circumstances in which this launched and then an injunction to ask them to register with the SEC.
That’s because this is a live network and a global network, with Europe probably willing to grant Ripple a license.
Hence you’d expect some mediation at this point between SEC lawyers and Ripple lawyers on how to resolve the matter without affecting the probably tens of thousands of investors across the globe.
If SEC is not willing to reasonably accommodate Ripple, then it would be obvious they have a different agenda which can be addressed by Incorporating in Zug or Frankfurt.
Thus there clearly has been a failure in communication with the stakes very high both for SEC and for Ripple.
The two therefore need to get talking to reach a settlement because presumably neither SEC nor Ripple wants thousands of investors in their doorsteps.