XRP, the crypto token used over the Ripple blockchain network, has suffered a major setback over the past few months following a lawsuit by the Security Exchange Commission of the US against Ripple blockchain, Ripple’s CEO, and Ripple’s President. Besides negatively affecting XRP’s value, the lawsuit has also resulted in several crypto exchanges delisting the digital exchange or halting traders from trading it on their platform.
Before the SEC lawsuit, XRP was trading at about $0.55 per XRP coin. But after the lawsuit was announced the prices dipped to below $0.30. Also, the digital coin has dropped to the fifth position from the third-largest cryptocurrency in terms of market capitalization due to its reduced value.
Exchanges that have halted XRP trading on their platforms
When the Lawsuit was first announced, only small crypto exchanges (Beaxy and CrossTower) delisted XRP from their list of traded cryptocurrencies. But that was only the beginning, exchanges are also careful to avoid finding themselves on the wrong side of the SEC and they are taking the precaution of dropping the digital coin awaiting how the court case shall be determined.
Some of the large crypto exchanges that have dropped XRP to date include:
What is the SEC lawsuit against ripple all about?
The lawsuit seeks to classify XRP as a security rather than a medium of exchange or currency as it has always been perceived to be since it was launched. SEC argues that XRP sale violated the federal security law by failing to correctly classify it and by extension provide enough information to investors.
If the court holds SEC’s argument, XRP will have to apply to be registered by security exchanges rather than the normal crypto exchanges that currently list it on their trading platforms. This may hurt the currency’s value though it is most likely that listing it as security may also boost its image among investors.
Ripple, the blockchain behind XRP, maintains that its crypto token, XRP, should not be classified as security since it has always operated as a digital currency.
Garlinghouse, the CEO of Ripple Labs, called the lawsuit an attack on the entire cryptocurrency industry and American innovation.
In their Wells Submission, Ripple stated, “The SEC’s theory, that XRP is an investment contract, is wrong on the facts, the law and the equities.”
“[The SEC theory] ignores the economic reality that XRP is, and has long been, a digital asset with a fully functional ecosystem and a real use case.”