Ripple Crushes SEC’s $1.3B Demand—What This Means for Crypto Regulation

Key Insights

• The SEC and Ripple have spent nearly 5 years locking horns with one another in one courtroom after another.
• The Fintech firm will now pay just $50 million, which is far less than the original $1.3 billion the SEC previously demanded.
• The crypto market responded positively to the news, with XRP rising by over 8% in 24 hours after the announcement to around $2.30.
• From a trading perspective, XRP is showing a great deal of upward momentum, but also signs of short-term overheating.
• So far, a break above the $3.4 price level from earlier this year could set the stage for a jump towards $10 in the next few years.

The SEC and Ripple have spent nearly 5 years locking horns with one another in one courtroom after another.

However, both parties appear to have reached a settlement at long last.

The Fintech firm will now pay just $50 million, which is far less than the original $1.3 billion the SEC previously demanded.

This legal win has what it takes to reshape not just Ripple’s future but also the crypto regulatory environment in the US as a whole.

Here are some of the details.

The Lawsuit That Shook Crypto

The SEC filed a lawsuit against Ripple Labs in December 2020, accusing it of raising $1.3 billion through the unregistered sale of XRP tokens.

The agency claimed that the sale of these tokens counted as a securities offering.

It even went further to name Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen in the case.

The lawsuit had immediate effects for XRP and the crypto industry as a whole.

At the time of the lawsuit, XRP was one of the biggest cryptocurrencies by market cap.

However, many exchanges started to delist the token, and uncertainty hung over XRP for the next few years.

A Settlement Years in the Making

The SEC confirmed that Ripple had agreed to pay $50 million to resolve the case on 8 May.

This stands as a massive reduction from the $2 billion fine the SEC initially pursued under former Chair Gary Gensler.

Judge Analisa Torres, who previously ordered Ripple to pay $125 million, now needs to approve the new agreement, which would see $75 million of escrowed funds returned to Ripple.

Ripple’s Chief Legal Officer, Stuart Alderoty, noted that the company is happy to put the matter to rest and focus on other things, like improving cross-border payments using blockchain technology.

Alderoty pointed out that the settlement covers institutional sales, which the court had ruled to be unregistered securities offerings.

However, the judge had also found that XRP sales on public exchanges did not constitute securities, in a partial win for Ripple.

XRP And The General Market Reaction

The crypto market responded positively to the news, with XRP rising by over 8% in 24 hours after the announcement to around $2.30.

XRP still remains one of the top five digital assets by market cap, and at the time of writing, the token boasts a market cap of more than $132 billion.

Momentum has continued further into 9 May, as XRP’s trading volume soared to $1.2 billion within an hour of the news, and wallet activations on the XRP Ledger spiked 30%.

Crypto enthusiasts continue to see the settlement as a bullish signal for XRP and for the industry as a whole.

From a trading perspective, XRP is showing a great deal of upward momentum, but also signs of short-term overheating.

The RSI currently has readings above the 70/100 mark, indicating that the market might be overbought.

At the same time, the MACD indicator shows a bullish crossover just as XRP is breaking out of the multi-month descending wedge illustrated.

This indicates that the bulls are still stronger than the bears.

So far, a break above the $3.4 price level from earlier this year could set the stage for a jump towards $10 in the next few years.

Overall, regulatory clarity has been one of the biggest hurdles for institutional adoption and with this legal cloud lifted, XRP could be in for more attention from banks and other payment providers.

In all, traders are advised to watch XRP price movements and see what the future holds for this asset.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.