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XRP умер? Что будет с токеном XRP после разбирательства с SEC - Binaryx
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Is XRP dead? What will happen to the XRP after the SEC dispute

At first, the third cryptocurrency in the world by cap rate was doing pretty well. It’s true because this tool was intended to combine the conservative banking system and Blockchain technology into one powerful thing. But now, Ripple has serious trouble. Questionable steps by the Ripple Labs leadership led to the fact that the US Securities and Exchange Commission (SEC) took over the cryptocurrency. Let’s see what happened inside Ripple and why the regulator turned against it. 

SEC allegations 

SEC representatives claim that the top management of Ripple Labs issued unregistered securities for Ripple tokens (XRP). In total, Chris Larsen and Brad Garlinghouse have sold nearly $1.5 billion in assets. Most of the coins were received by investors from North America and Europe.

Это изображение имеет пустой атрибут alt; его имя файла - 1_XRP_%D1%83%D0%BC%D0%B5%D1%80_%D0%A7%D1%82%D0%BE_%D0%B1%D1%83%D0%B4%D0%B5%D1%82_%D1%81_%D1%82%D0%BE%D0%BA%D0%B5%D0%BD%D0%BE%D0%BC_XRP_%D0%BF%D0%BE%D1%81%D0%BB%D0%B5_%D1%80%D0%B0%D0%B7%D0%B1%D0%B8%D1%80%D0%B0%D1%82%D0%B5%D0%BB%D1%8C%D1%81%D1%82%D0%B2%D0%B0_%D1%81_SEC-1024x397.jpg

According to the SEC, this money was needed to finance the company’s activities. So, the selling of billions of XRP tokens started in 2013. However, they were not officially registered with the Securities and Exchange Commission.

Moreover, Larsen and Garlinghouse were selling coins to build their capital. Thus, the fortunes of top managers increased by $600 million. At the same time, Ripple Labs also spent several billion XRP tokens on employee salaries, market making, and other expenses.

Document’s authors also state that only 15 companies operate in the Ripple coin-based payment network (ODL). All of them are representatives of the field of money transfers, but certainly not banks. All this is associated with high transaction costs, which the network is designed to solve. The Securities and Exchange Commission noted that Ripple Labs is paying rewards to those customers who use On-Demand Liquidity. Thus, the MoneyGram money transfer system received about $15 million. It turns out that the cryptocurrency network paid customers to provide liquidity.

Stephanie Avakian, the SEC spokesman, stated that Larsen and Garlinghouse deliberately concealed the sale of tokens from the public. Because of this, potential buyers received little data on XRP and the Ripple business. The state regulator sees the only solution to this problem – an injunction, confiscation of illegal income, and the charging of multimillion-dollar fines on the company.

The lawsuit will be considered by the federal court for the Southern District of New York. The main charge is a violation of the Securities Act (1933) regarding the registration of a token as a security.

The reaction of Ripple Labs was immediate. So, CEO Brad Garlinghouse believes that the SEC wants to take control of the entire cryptocurrency industry. Moreover, the head of the company called the regulator’s decision an attack on American innovation.  

How did the proceedings affect the XRP rate against the US dollar

The filing of a lawsuit affected the token’s exchange rate against the US dollar. According to the Coinmarketcap website, the cost of XRP fell by almost 50% to about 26 cents per coin. It happened immediately after the publication of the allegations.

Ripple’s performance on cryptocurrency exchanges has also changed. So, the token value on the Binance platform decreased by 30%, falling to $0.3. And on the BitMEX derivatives exchange, the coin has dropped in price by almost 100%! The quotes of the XRP token futures with an expiration date in March 2021 reached a value of 0.00000001 BTC (the contract is being traded to bitcoin). In terms of US dollars, the figure is $0.00023.

Those who placed orders to buy the Ripple token at the minimum value were able to get about 130,000% of the profit per trade. However, traders who opened long positions in the coin and waited for a further rise in the rate lost about $270 million in 4 days. Also, losses are observed for users with short positions – more than $135 million. 

How have companies responded to Ripple’s challenges 

Of course, problems with the regulator have raised concerns that could lead to massive delisting of the coin. The OSL cryptocurrency exchange was the first to remove the token. All trade and exchange operations were provided on this site.

Это изображение имеет пустой атрибут alt; его имя файла - 2_XRP_%D1%83%D0%BC%D0%B5%D1%80_%D0%A7%D1%82%D0%BE_%D0%B1%D1%83%D0%B4%D0%B5%D1%82_%D1%81_%D1%82%D0%BE%D0%BA%D0%B5%D0%BD%D0%BE%D0%BC_XRP_%D0%BF%D0%BE%D1%81%D0%BB%D0%B5_%D1%80%D0%B0%D0%B7%D0%B1%D0%B8%D1%80%D0%B0%D1%82%D0%B5%D0%BB%D1%8C%D1%81%D1%82%D0%B2%D0%B0_%D1%81_SEC-1024x397.jpg

Many other platforms followed. They also suspended trading on the CrossTower and Beaxy exchanges. The first one removed the token only on the American version of the crypto platform, while Beaxy allowed withdrawals.

The list continues to grow every day. The Bitwise Asset Management crypto fund sold its stake in XRP (3.8%) and excluded it from the Bitwise 10 Crypto Index Fund. Thus, support for the Ripple token has been completely discontinued. Jump Trading platform and investment firm Galaxy Digital followed suit. It’s stated by several sources from the crypto business at once.

Subsequent operations with the coin were terminated by the Simplex processing service. It allows users of many major exchanges (Binance, KuCoin, Huobi, and many others) to buy and sell crypto using bank cards. Now users of these sites will not be able to receive XRP.

Besides, the largest US crypto exchange, Coinbase, is expected to give up the token. It’s due to the site’s plan for public offering. So, further support from Ripple may cause problems with the implementation of this plan.

Many financial analysts have had their say on the XRP delisting. Francis Coppola believes that it’s the beginning of the end for Ripple. The termination of support for a token protects exchanges from potential violations of the law. It will become if the coin is recognized as a security and from that moment the support of the token is declared as illegal. Indeed, for the placement of securities, sites must have an appropriate license from the SEC. However, the process can drag on for many years because the American justice system is slothful.

What alternatives to Ripple should be considered for investing in 2021 

Cryptocurrency experts point out several coins worth looking out for. First of all, we are talking about Ether. The token recently broke the $600 mark, but analysts predict a $900 price by the end of the first quarter of 2021. It’s attributed to the launch of Ethereum 2.0, which sparked community interest and even higher price increases.

Also, great hopes are placed on Bitcoin forks and tokens of prime exchanges. According to analysts, Litecoin and Binance Coin will do the best in this category. Assets may rise in price to $220 and $50, respectively.

Other promising tokens are ADA, XMR, TRX, DASH, and ZCash anonymous coins. According to the Coinmarketcap website, these tokens are already becoming more expensive, and in 2021 the growth will be tens of percent.

They also distinguish coins from the DeFi sector, which are now listed on the Coinbase exchange and may well show their growth potential. Thus, the price of UNI and LINK tokens in 2021 will increase as the number of assets locked in applications increases. And the DeFi sector itself will find a second wind.

Expert opinion

By Oleg Marchenko 

If we look at this asset in terms of trading, then now is the time to trade. The fluctuations rate is 20-30% per day. You don’t need much knowledge for this: a minimal understanding of moving averages, support, and resistance levels will allow you to place Buy and Sell orders. Ripple had already done similar actions in September 2018, when it skyrocketed to 77 cents. And, interestingly, the price reached the same value now. Is it by chance?

Это изображение имеет пустой атрибут alt; его имя файла - IMG_20201225_190620_928-1024x397.jpg

As an experienced trader, I can say that I have already met many similar statements that led to a fall or rise. And there were not only XRP occasions. How many times has Bitcoin been “buried”? Anyone who provokes such fluctuations in the market participates in the scheme for making big money. And the tools are simple: make hype for the news, purchase an asset in advance, and then open a short position before the release of some compromising evidence. Bottom line: someone earns both ways, while someone believes the next news, and everyone is selling this asset. Only time will tell, but the probability of a full depreciation of this coin, in my opinion, is 5%. I would say about 0%, but the chance of force majeure, of course, always remains.

It’s not a call to action, but the opinion of a specific person! When it comes to buy or sell Ripple, it’s always up to you!

Conclusion

Now it’s time to sum it up. If you look at all happening in the crypto market now, it becomes clear that the SEC lawsuit directly threatens the Ripple. After all, the Securities Commission wants to block any transactions with the XRP token, return the coins with interests and pay a civil fine. The amount of recovery can be in the tens or even hundreds of millions of dollars.

Even if a decision is made on an out-of-court settlement, the financial regulator’s claim will significantly undermine the Ripple Labs position. After all, its main product – the XRP token – is positioned as a blockchain bridge that connects banking structures in the exchange of liquidity. And any inconsistencies with American and international law do not play in favor of the cryptocurrency company.

In any case, further fate will depend on the final positioning of the token. You need to decide how to use XRP – as a means of payment or an investment asset. After all, back in 2015, Ripple Labs compromised with FinCEN, which recognized XRP as a convertible virtual currency. Therefore, the top management of Ripple plans to defend its position.