The Securities and Exchange Commission (SEC) first brought the lawsuit against Ripple in December 2020, exactly four years ago, accusing it of violating federal security laws. The agency also charged top Ripple executives, including CEO Brad Garlinghouse, and Chairman Chris Larsen, for allegedly profiting about $1.3 billion from illegal sales of XRP.
Since then, the case has gone through several pivotal moments, with most of them favoring the blockchain company. Particularly, in July 2023, Judge Analisa Torres ruled that XRP in itself is not a security and that the sale of the coin on digital exchanges to retailers does not constitute securities.
However, the same court ruled that Ripple erred by offering XRP to institutional investors as these were investment contracts. Consequently, Ripple was ordered to pay a civil penalty of $125 million which is far below the $2 billion fine initially sorted by the SEC.
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SEC went on to appeal the 2023 ruling, challenging the programmatic sales of XRP of which it is supposed to present its opening brief by January 15. Ripple also filed a cross-appeal, questioning the specifics of an investment contract and how it relates to its XRP sales to institutional investors.
XRP Community Clamored for a Pro-Crypto SEC Chair
Amid the saga, the XRP and the global crypto community called for the resignation of Gary Gensler, the current SEC chair. They opined that his vague and stringent policies have suppressed the crypto industry and chased several top firms out of the United States.
It was on this base that Donald Trump placed his election campaign, promising a pro-crypto administration where blockchain technology would thrive. In his campaign, Trump promised that one of the first things he would do when he takes office will be to remove Gensler and replace him with a crypto advocate.
Gensler soon announced his resignation, stating that he would step down from office on January 20, 2025, the same day as Trump’s inauguration. Immediately, the search for a new SEC chairman began and several names were thrown in the mix including former SEC commissioner, Paul Atkins, Robinhood’s Dan Gallagher, Hester Peirce, and Binance US former CEO, Brian Brooks.
Yesterday, Trump announced Atkins as his pick for the office which immediately resonated with the crypto market. Bitcoin, the flagship cryptocurrency rallied on the news and surged to a new all-time high of $103k reaching a market valuation of $2 trillion.
One would expect XRP to mirror the same trajectory since its price movement has heavily depended on updates regarding regulations. Surprisingly, this wasn’t the case.
Why then Did XRP Crash?
Recall that XRP had surged by over 400% since November, triggered by Gensler’s resignation announcement. The coin climbed from its low of $0.5 to a yearly high of almost $3. The rally immediately pushed XRP to become the third-largest cryptocurrency, outpacing tokens like Dogecoin (DOGE), Solana (SOL), BNB, and USDT.
However, XRP started declining gradually but became intense after the choice of SEC chairman was announced. The plunge pushed XRP one step downward on the market chart, shifting it to the fourth position after USDT. The timing of this decline is particularly disturbing as it happened less than 24 hours after what was perceived to be good news was announced.
Why then did this happen? Is there any doubt that Atkins’s regime won’t favor the coin? Or could it just be the case of “buy the rumor, sell the news,” where XRP surged on the rumor of a new SEC chair and then plummeted when the actual event took place?
Meanwhile, others have linked XRP’s decline with the delay in Ripple’s RLUSD stablecoin launch. The coin was rumored to be launched on December 4, however, Ripple made a statement on X (formerly Twitter), informing the community that it is still awaiting approval from the New York State Department of Financial Services (NYDFS), and would launch the coin when it gets the regulatory nod.
Read Also: Is Ripple’s Stablecoin Launch Delay Behind the XRP Crash?
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications such as Coinfomania and Crypto News Guru, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.