The total crypto market value reached USD 2T for the first time ever last week, and one of the main drivers for the boost has been XRP. As we reported in December, the US Securities and Exchange Commission (SEC) has filed a case against Ripple Labs which led to a drastic price drop. So, why has XRP been gaining so much momentum over the past few days? Let’s take a closer look.
The SEC lawsuit against Ripple explained
The SEC alleges that Ripple illegally raised USD 1.3B through an unlicensed securities offering because they failed to officially register the offering. Securities, unlike digital tokens, are defined as tradable financial assets in the form of stocks, bonds or options. Ripple on the other hand claims that XRP is not a security but is actually a commodity and as such does not need to comply with SEC rules aimed at securities.
Even though XRP and Ripple certainly have taken a hit since the allegations came out, XRP’s price has slowly been recovering before shortly reaching the USD 1 mark this week. It’s been three years since XRP traded around that value. The token is still far away from its all-time-high of more than USD 3.37 in January 2018, but fans of the Ripple network have been optimistic in recent weeks.
How the SEC is defining digital currencies
XRP’s push this week can be explained by what’s been going on with the lawsuit. Ripple seems to be gaining the upper hand in its dispute with the SEC. Public documents that have surfaced show that the SEC has referred to XRP as “digital currency” in the past – which would undermine their claim that XRP should be viewed as a security. It should be noted that Bitcoin and Ether are not classified as securities by the SEC as of now. That is one of the reasons why Ripple and its supporters are hopeful of winning this case. Ripple has been granted permission to access the internal communications of the SEC defining whether XRP is a security or not.
The company also argues that the SEC waited eight years to take action against Ripple. These recent developments could mean it’s “Game Over” for the SEC, as one of Ripple’s lawyers put it.
Why XRP has surged in the past four weeks
Thus, XRP has increased over 200% over the past month and over 90% in the past seven days. Trading volume has slowed down during the week but be prepared for more price action as the SEC lawsuit continues. If you want to stay updated on Ripple’s dispute with the SEC, we highly recommend following attorney Jeremy Hogan on Twitter. He’s been following the case closely and has the inside scoop.
It might not be looking good for the SEC right now, but the agency will very likely shake things up in the crypto market. Under the Biden presidency, the SEC is aiming to focus on finding ways to regulate Bitcoin and other digital assets.
While some exchange platforms have delisted XRP after news about the SEC complaint came out, we decided to keep XRP on Bitpanda for now.
If you want to learn more about XRP or to start trading it, click here.