Ripple on the verge of a supercycle
Over the past day, the capitalization of the cryptocurrency market has decreased by 1.8%, while Ripple has grown by 4.8%. Being the only one of the TOP 10 cryptocurrencies that did not update the historical maximum last year, Ripple is preparing for a new supercycle.
Problems for Ripple began with the claims of the regulator represented by the US SEC (Securities and Exchange Commission) and the filing of a lawsuit. This led to the project dropping out of the TOP 3 by capitalization, and the XRP coin was delisted on the largest crypto exchanges, including Coinbase (NASDAQ:COIN).
At the launch of the project, the developers simultaneously released 100 billion coins, concentrating them in the hands of the company. The SEC’s claim is that in 2017-18 Ripple conducted a large-scale sale of XRP to network users. According to Messari agency estimates, $1.2 billion worth of tokens have been sold in four years. This is equivalent to launching an ICO or attracting investments. In this case, XRP must have the status of a security, the company is registered with the SEC and keep records of shareholders. In order to recognize XRP as a security, and to hold Ripple accountable for violating the law, the SEC appealed to the court.
The debate has been going on for several years with alternating success.
At some point, the developers were even preparing to move to another jurisdiction, and their accounts were blocked. However, the SEC made an unfortunate mistake in the lawsuit.
Ripple has requested internal documents from the SEC through the court, according to which some coins (Bitcoin, Ethereum) are recognized as a virtual currency, while others, such as XRP, are considered as a security. The SEC refused to provide information, citing the fact that this is only a personal opinion of employees (in particular, we are talking about a draft speech by the former director of one of the SEC departments, William Hinman). To which Judge Sarah Netburn noted the impossibility of not submitting documents, since they express a personal opinion and do not have additional privileges.
Ripple’s defense is based on the fact that the SEC does not have clear criteria for dividing cryptocurrencies into virtual currencies and securities, and it is Hinman’s speech that will allow rejecting the key claims of the regulator. Now the SEC has 14 days to file an appeal, otherwise the Commission is obliged to provide access to the requested documents.
Ripple’s lawyer James Phelan calls the incident a great victory and expects the termination of proceedings in the case this year. If Ripple manages to defend its point of view, it will be able to return to the conclusion of partnership agreements with renewed vigor and achieve an increase in network usage. Due to ultra-low fees and high transaction speeds, about a hundred traditional financial institutions are already using the platform.