As head of the CEO, Gary Gensler has made no secret of his disapproval of the way some cryptocurrencies operate in the United States. His case against XRP is one of the longest-running cases they have open after filing the lawsuit in December 2020.
The Securities & Exchange Commission (SEC) have a duty of care to American retail investors to protect their money and investments.
The language of the SEC has been more direct recently, and it is expected they will go after plenty more projects in the cryptocurrency space over the next twelve months.
The regulatory landscape in America is due for a revamp. The rise of the internet has facilitated the breakthrough of many different types of companies that previously didn’t exist. One such example is cryptocurrency gambling operators, where bitcoin casino for real money options exist – allowing users to purchase services in both fiat and cryptocurrencies. These industries are not all overseen by the SEC, but it is one example of how the digital revolution has opened up possibilities for companies that wouldn’t otherwise exist.
Ripple Labs, who created XRP, is noted as one of the leading tech companies in the US at the moment.
Who Are Ripple Labs?
Operating out of San Francisco, Ripple is a multi-billion dollar company that specializes in digital assets and creating digital payment solutions on a global scale. The company, in its current form, has been active since 2012. Its two chiefs are Brad Garlinghouse and Chris Larsen.
Ripple is a financial services company that aims to utilize cryptocurrency and blockchain to improve traditional financial solutions.
They have received several awards for their innovation within the digital asset space. Although the SEC has questioned their operations, they still hold a lot of respect within the industry.
What’s The Basis Of The Case Against Ripple?
The SEC alleges that Ripple failed to register XRP as a security. By doing so, they misled investors by painting XRP as a cryptocurrency instead of an investment or a security.
The spine of the case alleges that the two executives of Ripple have profited from an unregistered securities sale whilst masquerading XRP as a cryptocurrency.
It has been dubbed the “crypto trial of the century” as the case’s outcome could shape cryptocurrency legislation in the United States.
If the outcome is favorable for Ripple, it can relist XRP as a cryptocurrency, and it could see the price explode in value.
During the bull run of 2021, XRP increased dramatically in price from around $0.35 to $1.70 – even though you cannot purchase the asset in the United States, it is available in a host of other countries, including the United Kingdom, Australia and Japan.
The case has attracted considerable attention since it was first announced in December 2020. There have been several small wins in court for Ripple’s defence team, and it has led to a positive outlook from cryptocurrency investors and experts.
In early 2023, Brad Garlinghouse stated that he believed the case would be over in the single-digit months, and he hopes it will be before June.
However, several experts have also noted that the case should be concluded by the end of 2023. Although many believe and hope that it will be sooner.
Following The Result
Whichever way the Judge rules will have a profound impact on the cryptocurrency market.
XRP has the potential to become a multi-billion-dollar asset. If it comes out of the case with regulatory clarity and a framework that states it is a cryptocurrency and not an asset, the value could explode over the following days.
Conversely, if the Judge rules in favor of the SEC, it could cause the price to depreciate, which will have a significant negative consequence on all cryptocurrencies. Given that the case has rumbled for over two years, it is hard to imagine it will go on for much longer.
The United States has a complex and thorough legal system, and it isn’t out of the question that the case could rumble on for several more years, but few commentators think this will be the case.
If the SEC come out of the case victorious, some analysts and experts have stated they may go for larger companies like Ethereum.
In any event, the case will not be the end for Ripple. A worst-case scenario is that they relocate their business to a more cryptocurrency-friendly country. Brad Garlinghouse has said this will be the case if the court doesn’t rule in their favor.
In the long run, it could severely damage the United States. It is commonly viewed as one of the top countries in the world regarding financial innovation.
The outcome of the case could change that opinion. The case will end, but will it be good news for Ripple or bad news? We’re likely to find out at some point this year.