The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has significant implications for the cryptocurrency industry. The question at the heart of the lawsuit was whether XRP, a digital asset majorly distributed by Ripple, constitutes a security under U.S. federal securities laws. This question was answered in July 2023 when the court determined that non-institutional sales of XRP were not securities offerings.
However, the penalty Ripple has to pay for institutional sales of XRP is yet to be determined, and the lawsuit is in the penalties phase. With the SEC seeking approximately $2 billion from Ripple, many in the community are speculating on the effects the end of the lawsuit could have on Ripple and XRP.
Read Also: As Ripple-SEC Lawsuit Takes a New Turn, Legal Expert Predicts When XRP Will Hit ATH
The Potential Effects of ODL on XRP’s Price
One prominent topic of discussion is the potential impact of Ripple’s business on XRP’s price. This discussion was recently reignited by Crypto Eri (@sentosumosaba), who highlighted a key argument presented in the Ripple Wells Submission for the SEC.
Ripple Wells SUBMISSION for the SEC.
It's necessary to share again, because many new hype channels are promising the moon with the use of #XRP as a bridge currency.
ODL transactions are demand-neutral, therefore do not impact the price of #XRP.
👉Focus on builders & devs… pic.twitter.com/A3plQ00kxT— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) March 30, 2024
Crypto Eri believes Ripple’s business practices are not meant to improve XRP’s price, and the company made a similar argument in the report.
Crypto Eri drew attention to misleading claims by numerous new “hype channels” that claim Ripple’s activities could cause an XRP price surge, specifically as a bridge currency, arguing that this claim is far from the truth. She described ODL transactions as “demand-neutral” with no impact on the price of XRP.
Ripple asserts that XRP is a utility token primarily used to facilitate cross-border payments through its On-Demand Liquidity (ODL) product. ODL allows financial institutions to settle payments more efficiently by utilizing XRP as an intermediary currency.
Read Also: XRP Sees $2.6 Billion Inflows in Just a Week As Investors Favor Ripple in SEC Lawsuit
Ripple argues that its promotion of ODL is primarily focused on driving business growth, not manipulating the price of XRP. It highlights two key points:
Demand Neutrality of ODL Transactions: Most ODL transactions involve the near-simultaneous purchase and sale of XRP, resulting in a net-zero impact on its overall demand and price.
Investor Independence: Extensive data analysis, according to Ripple, demonstrates that XRP holders do not rely on its efforts for price growth. It also shows that holders do not view buying XRP as an investment in Ripple.
Crypto Eri’s statement mirrors her stance from last year when she asked investors not to depend solely on Ripple to increase XRP’s price, pointing out that the company’s sales and marketing only contribute to a small amount of the digital asset’s trading volume.
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