The price of XRP, the digital asset used in Ripple Labs’ payment and exchange network, posted a 1.3% decline in Hong Kong in the 24 hours to 10:15 am. The decline erased gains made after the Securities and Exchange Commission (SEC) released internal documents on Tuesday. Ripple had claimed that these documents could provide evidence of unfair targeting by the regulator, but the market’s reaction was short-lived. In the last seven days, XRP saw a 2.05% drop in value.
Read more about the Ripple SEC lawsuit and how it influences the price of XRP, and find the most important financial news from around the world with the Born2Invest mobile app.
In December 2020, the SEC filed a lawsuit against Ripple, alleging that the sale of XRP constituted an unregistered securities offering
Ripple Chairman Chris Larsen and CEO Brad Garlinghouse were also named as co-defendants for their alleged involvement in aiding and abetting the violations. As part of the lawsuit, numerous documents related to a speech by former SEC Director William Hinman, which discussed the classification of cryptocurrencies as securities, were released on Tuesday.
Initially, the SEC sought to keep these documents secret. However, in May, Judge Analisa Torres of the U.S. District Court for the Southern District of New York ruled in favor of their release, which was seen as a positive development for Ripple. In his 2018 speech, Hinman stated that sales of Ether were not securities transactions and implied that the disclosure provisions of the federal securities laws were of little value with respect to cryptocurrencies like Ether and Bitcoin. This speech has become a crucial point of contention as Ripple looks to bolster its fair notice defense.
Among the documents released are email exchanges between Hinman and several SEC staffers in preparation for his speech. One email revealed a comment from an SEC staffer stating that a strong stance against the disclosure provisions of the federal securities laws regarding Bitcoin could undermine regulatory efforts against other crypto assets that are considered securities. Stuart Alderoty, chief legal officer of Ripple, has called for an investigation into Hinman, claiming that the documents show he ignored warnings and provided analysis without a legal basis.
Alderoty stressed that unelected bureaucrats should abide by the law within the limits of their jurisdiction and could not create new laws, as Hinman allegedly tried to do. Brad Garlinghouse, CEO of Ripple Labs, expressed dismay in a tweet, calling it “absolutely incomprehensible” that a regulator would proceed with the speech despite internal opposition. Garlinghouse also criticized the SEC for taking advantage of the lack of regulatory clarity by taking enforcement action since the speech.
As the market awaits further developments in the Ripple SEC lawsuit and the impact of the released documents, the price of XRP faces uncertainty and potential volatility. Investors and observers will be watching the legal proceedings and regulatory landscape closely for any potential impact on the future of XRP and Ripple’s operations.
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