In December 2020, the United States Securities and Exchange Commission (SEC) charged Ripple with conducting an unregistered $1.3 billion security offering. The SEC alleged that Ripple’s cryptocurrency, XRP, is a security, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to the public market system. Ripple’s defense is based on the claim that XRP is a currency and not a security. However, the SEC’s charges caused XRP’s price to plummet as more and more exchanges started to delist it in fear of the SEC. Despite Ripple’s defense, the battle between Ripple and the SEC is still ongoing, and no one has hopes of quick resolutions.
The Hinman Speech and Ripple’s Defense
William Hinman, a former director of the SEC’s Division of Corporation Finance, made a speech in which he indicated that the agency didn’t consider ETH security at the time. Ripple’s lawyers have fought to find out more about how Hinman came to that conclusion in hopes it could impact XRP’s classification as well. In October 2022, they managed to obtain the documents, which took them roughly 18 months to do so. Ripple fought off multiple objections on behalf of the SEC, the latest one of which demanded the court to seal Hinman’s Speech but was denied by Judge Analisa Torres. This has seemingly tipped the scales in Ripple’s favor, something that already seems to be priced in XRP’s performance, as investors are turning bullish on a favorable court decision. The SEC seems to be under tension, and it shows. The Commission seems to have deleted Hinman’s biography from its website, and they have until June 13th to hand over unredacted emails of Hinman’s internal communications.
The Industry Under Fire
Ripple isn’t the only company under siege. The SEC just pressed charges against both Coinbase and Binance, the two leading cryptocurrency exchanges. They allege that the companies have been violating securities laws, among other things (for Binance). It feels as if the entire industry is under fire. And yet, XRP’s price remains resilient. Over the past seven days, it’s remained the only altcoin from the majors that’s still in the green, albeit by a very slight margin. However, there’s a big deadline coming on June 13th – as mentioned above. The outcome of the session will likely have an impact on XRP’s price, and it’s very exciting to see exactly what. In any case, investors seem to be pricing in a positive outcome as XRP has added more than 23% to its price in the past 30 days alone.
The SEC’s charges against Ripple have caused an ongoing legal battle that has lasted for two and a half years. Despite Ripple’s defense, the SEC seems to be under tension, and the entire industry is under fire as the SEC has pressed charges against both Coinbase and Binance. Ripple’s defense is based on the claim that XRP is a currency and not a security. Ripple’s lawyers have fought to find out more about how Hinman came to the conclusion that ETH was not a security in hopes it could impact XRP’s classification as well. The outcome of the session on June 13th will likely have an impact on XRP’s price, and investors are pricing in a positive outcome as XRP has added more than 23% to its price in the past 30 days alone.