XRP, with a $27.9 billion market capitalization, is now ranked 7th among the top cryptocurrencies, as it has risen by 170% since the beginning of the year. The asset’s growth has given a ray of hope to investors that the SEC’s legal action against Ripple won’t have much impact on it. Naturally, legal actions are damaging to stocks and cryptocurrencies. But in this case, Ripple’s XRP has proven otherwise. As of the time of writing this report, XRP, which climbed by 6% on April 1, is trading at $0.61 and has its market capitalization at $27.9 billion, based on the data obtained by Nomics. Thus, the asset has risen to a higher level than where it was prior to the SEC legal tussle, charging Ripple with a $1.3 billion fine.
SEC’s allegations against Ripple
On December 18, 2020, less than a week before the lawsuit, XRP was trading at $0.58 with a market capitalization of less than $27 billion.Contrary to popular belief that the lawsuit might be devastating to XRP, which crashed to $0.18 as a reaction to the SEC suit, the token has witnessed a steady price rise. In the lawsuit, the SEC accused Ripple Labs and its executives of transacting in $1.3 billion unregulated and unregistered securities, while XRP was the asset being referred to as the unregulated security.
Generally, security refers to an investment contract that demonstrates that one has an interest in a financial undertaking with the motive of making profits. The SEC is the central body charged with the regulation of the sale of securities in the US. In the heat of the lawsuit, some exchanges and even brokers such as Coinbase, Binance, Blockchain, and etoro, stopped the trading of XRP on their platforms. Others also threatened to follow suit if the allegations raised against Ripple Labs was found to be true. Besides, Ripple has lost its partnership with MoneyGram. Both parted ways last month when MoneyGram raised concerns about the allegations.
How Ripple denies the SEC’s allegations
However, Ripple and its executives have vehemently denied the allegations, accusing the SEC of leveling up unfounded allegations against them. The respondents also demanded that the court order the plaintiff to show documents from which it concluded that Bitcoin and Ethereum were not securities. Recall that the SEC didn’t include Bitcoin and Ethereum on the list of securities. The regulatory body has refused to disclose the mechanisms it is using to declare a cryptocurrency as a security. If Ripple’s demands are met, such documents may contain the declaration of XRP as a virtual currency instead of a security, a disclosure that may strengthen Ripple’s stance.
Likewise, the revelation could force the agency to explain the criteria for declaring XRP as a security. Ripple would maintain that it has the same or similar features as Bitcoim and Ethereum. In February, XRP hit a high of $0.61, followed by a reversal to $0.4 in just two weeks. This volatility might indicate that investors are optimistic that Ripple and XRP would win the case. The optimism was partly strengthened by Tether’s escape from a conviction after being accused by the New York Attorney General but was made to pay just a fine of $18.5 million. The rise in XRP price might indicate the bullish trend in the general crypto market is still very strong.