The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) has reached a critical juncture. The SEC recently submitted a filing outlining its desired remedies, including a hefty $1.95 billion fine for Ripple.
The SEC alleged that Ripple violated federal securities laws by selling XRP as an unregistered security when the regulator filed the lawsuit in 2020.
After a prolonged legal battle, the court ruled that non-institutional sales of XRP are not security offerings. The regulator seeks to Ripple with a huge penalty for the sales of XRP to institutional investors, hence, the $1.95 billion fine.
Read Also: Ripple Faces Possible $3 Billion Fine, As XRP Lawsuit Takes New Turn: Details
The SEC’s proposed judgment will require Ripple to pay the fine within 30 days if the court rules in favor of the SEC. Should Ripple choose to appeal the decision, the 30-day window to settle the fine would begin upon the conclusion of the appeals process.
Is an XRP Selloff Coming?
Community members fear that Ripple may resort to selling a portion of its XRP holdings, specifically those currently in escrow, to cover this potential financial obligation.
According to Ripple’s API data as of March 24, the company holds over 40.1 billion XRP in escrow wallets. Selling enough XRP to reach the $1.95 billion mark could involve offloading approximately 3.14 billion XRP at the current price of $0.6194.
Ripple’s regular monthly XRP sales have historically caused minor price fluctuations, and a large-scale selloff could have significant negative consequences. However, it is crucial to understand that the court has not decided on the case, and Ripple might appeal any unfavorable decision. Furthermore, the firm is expected to file a counter-argument to the SEC’s filing next month, contesting the proposed penalties.
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Beyond the immediate financial implications, the SEC’s lawsuit against Ripple raises broader questions about the regulatory landscape surrounding cryptocurrencies.
The classification of XRP as a security by the SEC could have ripple effects throughout the industry, impacting other digital assets and potentially hindering the growth of the cryptocurrency market.
Read Also: Brad Garlinghouse Updates Ripple IPO Status in the U.S.
It’s worth mentioning that the SEC is also targeting Ethereum, but Ripple CEO Brad Garlinghouse believes the regulator will lose the battle.
While the short-term outlook for XRP’s price depends on the court’s decision and Ripple’s response, the long-term ramifications of this lawsuit extend far beyond the digital asset.
A victory might give the SEC confidence to double down on its enforcement strategy through frivolous lawsuits. However, a decisive ruling in favor of Ripple might pave the way for reasonable crypto regulation.
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