XRP boosted by Ripple's challenge against the SEC, falters on stablecoin concerns

Ripple (XRP) surged in value this week as the latest round of blows were exchanged in the ongoing battle between Ripple (the company behind the XRP Ledger and Ripple payment system) and the United States Securities and Exchange Commission (SEC).

XRP's positive price action coincided with Ripple's challenge against the SEC's request for a $2 billion penalty, with the token currently jumping to $0.55 on 24 April before settling to just under $0.53 at the time of writing on 25 April. Despite the correction, XRP remains almost 25% higher than the year-to-date low of $0.41 on 13 April.

Ripple's opposition brief, filed in response to the SEC's penalty demand, appears to have sent a strong signal to many traders and investors in the crypto community who are eagerly tracking the case's progress. At the same time, XRP holders are also concerned about how the introduction of Ripple's new stablecoin may impact the original XRP token.

Ripple vs the SEC: the story so far

Ripple's recent legal manoeuvring is only the latest in its ongoing dispute with the SEC regarding the alleged improper sale of XRP tokens to institutions.

In 2020, the SEC accused Ripple of raising over $1.3 billion in 2013 through the sale of XRP in an unregistered securities offering to investors. Ripple countered this allegation by citing earlier statements from an SEC director to bolster its argument that XRP should not be classified as a security. Some clarity was gained in July 2023, when the court ruled that XRP (and, by extension, cryptocurrency in general) did not count as a security when sold via exchange but was a security when sold to institutional investors. This is an important distinction, as it is relevant to the initial coin offering (ICO) method of capital fundraising that was used by Ripple and many other crypto projects.

The SEC accused Ripple and its executives, Brad Garlinghouse and Christian Larsen, of selling unregistered securities worth over $1.3 billion through their XRP offerings. Ripple allegedly failed to file required registration documents and did not provide sufficient information to investors. In March 2024, Ripple revealed that the regulator has since pushed for the company to pay a $2 billion fine as a penalty.

The lawsuit's outcome holds importance for both parties and the crypto market at large as the SEC explores the limits of its ability to regulate the industry, potentially impacting Ripple's future and determining the executives' liability for securities law violations.

Ripple pushes back against SEC's $2 billion penalty

On 22 April, Ripple countered the SEC's fine and submitted an opposition brief advocating for a reduction in settlement costs to $10 million, a significant departure from the SEC's initial demand of $2 billion. 

The company stressed its adherence to the law while contesting the fine, giving the following statement:

"Ripple has every intent of adhering to that guidance in the future and every incentive to do so. The SEC's Draconian remedial requests are ungrounded in law or principle. This Court should reject them in their entirety."

Arguing against the hefty penalty proposed by the SEC, Ripple emphasised its lack of profit after accounting for revenues from institutional sales, taxes paid, and incurred losses. Additionally, Ripple referenced the LBRY case, where the SEC imposed lesser fines in similar regulatory conflicts.

Ripple's legal representatives have also stated that "Ripple's conduct was not egregious," highlighting that its institutional sales were conducted with full transparency to sophisticated entities over an eight-year period. They further asserted that there were no allegations of deception or misleading behaviour on Ripple's part.

XRP price responds to legal challenge, upcoming stablecoin 

This firm stance from Ripple was well received by XRP enthusiasts following Ripple's legal action, which is evident in the subsequent price increase. Ripple and its XRP ledger are touted as a fast, scalable solution for cross-border payments, and the company works with key institutional partners around the world. However, the ongoing regulatory conflict with the SEC remains a thorn in its side.

Although Ripple as a company does not control all the XRP in the world, the token's value as a speculative asset is heavily influenced by the fortunes of the company. 

On 4 April this year, Ripple announced its intention to launch a stablecoin pegged 1:1 to the US dollar and backed by cash reserves. The proposed stablecoin will initially be available on the XRP Ledger and Ethereum blockchains and serve as a way for Ripple to strengthen connections with established financial institutions that are still wary of volatility in the cryptocurrency sector. 

Ripple senior vice president Eric van Miltenburg recently confirmed the company's intention to launch its own stablecoin on the XRP ledger later this year, pending regulatory approval. The XRP community is divided in their enthusiasm over the new token. While some welcome a new asset that would strengthen the profile of the XRP ledger, others are worried that the XRP token will face a rival from within and potentially be depreciated in favour of the new stablecoin. It is also still unclear if the Ripple stablecoin will also be backed by XRP.

Shift in capital towards XRP markets. Time to buy at a discount?

The recent movements in XRP's price reflect a broader redistribution of capital within the cryptocurrency market. For instance, XRP has surged approximately 25% against Bitcoin over the past two weeks, rebounding from its lowest level since January 2021.

Despite lagging behind the overall market performance in 2024, XRP's lower prices are viewed favourably by some investors as an attractive investment opportunity. They anticipate a potential rebound, expecting XRP to align with or even surpass the broader market's performance in the future.

XRP whales make waves

Another positive sign for XRP is that the asset has also seen significant buying activity from large investors, often referred to as whales. The number of whales holding at least 1 million and 100,000 XRP tokens has notably increased in April. Similarly, there is a rise in the number of small investors, known as fish, who hold at least 10,000 and 1,000 XRP tokens.

Such accumulations typically signal anticipation of positive developments or price movements as both retail and institutional investors position themselves to capitalise on favourable market dynamics.

Get the best conditions on XRP and crypto trading on StormGain

The SEC case and stablecoin launch are both expected to be major market movers for XRP, so traders should keep up with both factors in order to inform their decisions. 

Whether you're looking to secure your position in the future of XRP or other cryptocurrencies, StormGain offers the ultimate all-in-one crypto platform for both beginners and experts aiming to maximise their profits.

StormGain allows for 24/7 trading of the top digital assets through a fast, user-friendly app or on the website. In addition to cryptocurrency trading, StormGain users enjoy exceptional perks, including tokenised stocks, crypto indices, and staking. StormGain clients even have the option to set up a passive income stream with an integrated Bitcoin cloud miner, a free service that earns you Bitcoin (BTC) while you trade without draining your device's resources or electricity. 

StormGain also offers integrated trading signals and an educational program packed with valuable insights suitable for traders at all skill levels. Not a StormGain user yet? Just take a few seconds to register and access thrilling new opportunities in the crypto market. Join now and try a demo account to start your crypto trading journey!