By Hidayat Sultanli
On Dec 24, 2020
The decision of the SEC shook the Ripple and its community. Before that, XRP was stabilizing itself at around $0.50, but the lawsuit changed everything.
The end of 2020 is the period that cryptocurrency enthusiasts will remember for a long time. Bitcoin hit ATH and keeps going to the moon. Besides Bitcoin, almost every altcoin market is bullish during this period. Bitcoin plays the role of the leader in the market and affects the price of every altcoin.
Before the bullish sentiment in the cryptocurrency market, the price of XRP was around $0.26. Also, it was so stable that almost considered a “stablecoin.” However, the boom in November more than doubled the price of XRP. On November 24, XRP was testing the price of $0.78 and ended that day at $0.69. Since then, XRP was roaming around $0.60.
U.S. Securities and Exchanges Commission published a press release on 22 December about charging Ripple and two executives of conducting a $1.3 billion unregistered securities offering. According to the press release, SEC accused Ripple, Christian Larsen (former CEO), Bradley Garlinghouse (current CEO) due to the capital raised to finance the business. SEC alleges that they raised funds issuing XRP in the form of unregistered securities to the U.S and worldwide. They failed to register the issuance of XRP, and it is a violation of federal security laws.
Stephanie Avakian, Director of the SEC’s Enforcement Division, stated:
“Issuers seeking the benefits of a public offering, including access to retail investors, broad distribution and a secondary trading market, must comply with the federal securities laws that require registration of offerings unless an exemption from registration applies.”
Marc P. Berger, Deputy Director of the SEC’s Enforcement Division, said:
“Here, we allege that Ripple and its executives failed for years to satisfy these core investor protection provisions, and as a result, investors lacked information to which they were entitled.”
The lawsuit caused a significant price decrease in the Ripple. The price of XRP fall to the before boom price level of $0.25. The drop was huge on 23 December, and during the day, it was $0.21. Today it seems that XRP puts itself together and displays little increase during the day. According to the CoinMarketCap, price decrease caused XRP to swing back in the ranking of market capitalization. USDT is now the 3rd biggest cryptocurrency for its market cap.
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