Ripple’s XRP, currently the fourth-largest cryptocurrency, according to CoinMarketCap, is fighting for its life.
XRP, a digital token controlled by San Francisco-based Ripple, has lost half its value in the last 24 hours, entering a free fall after the U.S. Securities and Exchange Commission (SEC) said the token was illegally placed to retail customers.
Now, as a number of smaller cryptocurrency exchanges remove XRP from their platforms, traders and analysts are questioning the future of XRP, and one longtime critic calls it “the beginning of the end”.
“I think it’s the beginning of the end,” said Frances Coppola, a financial analyst and commentator who has publicly criticized the company and the XRP token in the past. “Investors are already rejecting XRP as quickly as possible.”
The price of XRP, after soaring until November on the back of a hotly anticipated gift of a new cryptocurrency, plummeted from 0.64 to $ 0.30 in less than a week as traders and investors processed the news.
Earlier this week, Ripple CEO Brad Garlinghouse revealed that the SEC had filed a lawsuit against the company claiming that the XRP token was a traded asset, known as a security and as such subject to its regulations. The lawsuit alleges that Ripple has collected $ 1.3 billion in unregistered offerings of securities since 2013.
Three smaller crypto exchanges, OSL, Beaxy and CrossTower, have temporarily suspended XRP trading or removed it altogether. In a further blow, Bitwise Asset Management liquidated its XRP position, the statement said.
Meanwhile, a spokesman for the U.S. Coinbase, one of the world’s largest stock exchanges that boasts nearly 40 million users worldwide and is preparing for a mammoth IPO, said he was currently “considering [its] opportunities ”when asked how they would respond to the SEC’s lawsuit against Ripple.
“Any exchange that allows XRP trading potentially violates the law, so exchanges will have to remove it from it,” Coppola said, adding that the SEC has a “very well-complex case,” although it confirms that the legal points are very fragile, so XRP will still not disappear. “
“This potential lawsuit is deadly serious for XRP, perhaps even deadly,” financial author and trading veteran Glen Goodman, who bought and sold XRP “at different times,” said via email.
“The SEC isn’t kidding – if it wants to give Ripple an example as a warning to similar crypto companies, it will win in this case, and XRP may have to be removed from most crypto exchanges.”
However, Ripple CEO Brad Garlinghouse, who is also accused of violating U.S. Securities Act, along with former CEO Chris Larsen, has vowed to fight the lawsuit.
“The SEC is completely wrong in terms of facts and law and we are confident that we will eventually overcome the neutral fact finder,” Garlinghouse wrote in a blog post.
“The SEC has allowed XRP to function as a currency for more than eight years and we are questioning the motivation to launch this action just days before the administration change.”
Ripple’s response, combined with the time of the SEC, which comes at the end of the Trump administration, has stopped the XRP sell-off for now.
“The XRP fell fast and hard, but it quickly found support at the level it started the mammoth steering wheel a month ago,” Goodman said. “So to put that in perspective, we’re still going back to prices in November here! But it could get worse, depending on how the new SEC administration decides to proceed. The officials who started this lawsuit are leaving with the Trump administration.” , so we can’t know what their replacements will decide to do. “
However, the outlook for Ripple and XRP next year looks bleak, with some cryptocurrency investors expecting XRP to continue its long-term decline, causing it to lose more than 90% of its value from its 2018 highs.
“The prospects for a transformative 2021 for Ripple now seem utopian. Just as regulatory pressure eased, the SEC has made it clear that it is delaying but not forgetting,” said Antoni Trenchev, managing partner of Nexo’s digital asset manager, via email. . “During 2020, the price of XRP was directly correlated with the reduced attractiveness of the project on social media, and the SEC lawsuit dealt an additional blow to XRP’s potential for a price jump.”
By the way, some from the bitcoin and cryptocurrency community who think Ripple’s control of XRP means it wasn’t decentralized enough to be considered similar to bitcoins or other major tokens cheered Ripple’s troubles.
“It’s good for bitcoin in the sense that more people will be educated about why bitcoin is different from everything else in crypto,” said an engineer in the bitcoin buying application Swan Bitcoin known as Gigi, who is also the author of the bitcoin book 21 lessons.
“Grouping bitcoin with projects that could be affected by such a lawsuit is a mistake in the category. The whole point of bitcoin is in creating something that is like a natural resource, something that simply exists in the world. Nothing else in the crypto space has this property.”