The main news this week in the world of cryptocurrencies is the lawsuit of the US Securities and Exchange Commission (SEC) against Ripple. The management of the latter is accused of an unregistered placement of securities worth $ 1.3 billion, that is, the scale of the problems promises to be large.
Against the background of what is happening, the XRP token has seriously collapsed in price. However, according to experts, the situation will not exhaust itself.
We checked the latest data: XRP is trading at 27 cents this afternoon, with a local bottom for the token tonight at 22 cents. The graph of the cryptocurrency rate for the last week clearly shows the potential for the influence of government agencies on the fate of cryptocurrencies.
As a result, XRP has dropped 52 percent over the past week. It is important to note that the trading volume over the past 24 hours is the equivalent of $ 15 billion, while the project’s market capitalization is $ 12.31 billion.
Usually, this situation is typical only for stablecoins, since transactions with them are carried out very often, and traders sometimes sell and buy such coins several times a day. In the case of XRP, this signals panic among investors who have undertaken to get rid of the asset. At the same time, there are also those people in the niche who buy XRP on a drawdown in the hope of a recovery in the rate. However, as representatives of Cointelegraph note, such a scenario may not happen.
What will happen to XRP
First of all, a little context. As we reported this morning, cryptocurrency platforms have reacted to the situation. In particular, the sites CrossTower, Beaxy and OSL suspended operations with XRP, and the Bitwise investment fund completely liquidated its own position in this cryptocurrency.
This morning it became known about the development of the situation. According to representatives of The Block, the cryptocurrency investment companies Galaxy Digital from Michael Novogratz and Jump Trading have stopped relations with the token. According to three sources, Jump management is no longer going to provide liquidity in pairs with XRP on various platforms. This means that the spread – that is, the difference between buy and sell orders – will widen, which will have a negative impact on the activity of investors and traders. Accordingly, things are not going well for XRP here.
But the problems did not end there. According to Cointelegraph, representatives of the MoneyGram service published their response to what is happening. Company representatives noted that they “do not use the ODL (On-Demand Liquidity) platform and RippleNet for direct transfers of user funds” – both digital and others. Accordingly, the SEC’s activity should not affect MoneyGram. Here is a quote.
MoneyGram continued to use its other traditional FX trading counterparties throughout the term of its agreement with Ripple and does not depend on the Ripple platform to meet its trading needs.
That is, here the platform employees disowned the use of Ripple products, which looks quite understandable against the background of the proceedings with the SEC. At the same time, in June 2019, the companies announced a strategic partnership, and in February 2020, the platform received $ 11.3 million in investments from Ripple. Although later the management of Ripple sold part of their stake in MoneyGram in the amount of approximately $ 15 million.
According to Forbes, larger platforms may further pursue the delisting of the token from Ripple. In particular, this is allegedly being discussed by Coinbase executives. After all, the exchange is based in the USA, which means that if something happens, it will have problems first.
Representatives of the cryptocurrency community recall the old cases of the US Securities and Exchange Commission against EOS and Kik, which ended with the payment of fines. However, as noted by Cinnemhain Ventures expert Adam Cochran, the state of affairs at Ripple is much worse than the cases mentioned. Here is a quote.
Unlike the Kik and EOS cases, where the SEC only found violations in relation to the securities at the time of sale, here the Commission points out that XRP is still in violation of the law. That is, SEC representatives believe that XRP is a security even now. Hence such a reaction of exchanges.
Here is another quote from Cochran that emphasizes the complexity of the case.
They have several clauses of documentation confirming centralization, issuance of securities, and methods of token sales. There is no way to refer to ignorance or stupidity. SEC representatives have personally named the leaders in charge, and they do so only when they are ready to fire a fatal shot. This is much more common in detecting fraud than in conventional securities transactions.
That is, the analyst’s forecast cannot be called positive for sure.
Adam also commented on possible information about the imminent delisting of XRP from platforms. The latter may face risks if the token is recognized as a security.
Sources suggest that Coinbase has already held talks with a consultant to delist XRP. It looks like there are two potential plans currently in the making, one of which is Friday’s delisting. It is unclear which Coinbase products will be affected, but most likely Coinbase and Coinbase Pro are in question.
We believe that the situation for investors is very dangerous. Of course, the token is now traded much cheaper than a month ago, but a full-fledged trial has not yet begun. Therefore, the recovery of XRP positions may not happen – at least you should be ready for such an option.