The ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) continues to negatively impact XRP’s price. Its poor performance has discouraged many investors.
However, a legal expert has weighed in, sharing a potential reason for XRP’s abysmal performance despite Ripple’s numerous victories over the SEC.
Read Also: Ripple CTO’s Past Comments Show the True Value of XRP
SEC Seeks Remedies for Alleged XRP Sales Violations
The SEC filed a lawsuit against Ripple in December 2020, alleging that the company had violated securities laws by selling XRP as an unregistered security. After a prolonged lawsuit, the court determined that non-institutional sales of XRP did not violate securities laws. The legal battle has entered the remedies phase, and the SEC is seeking a remedies package from Ripple, including a $2 billion fine, which Ripple executives have vehemently contested.
The Reason for XRP’s Poor Performance
A recently redacted version of the SEC’s motion for a remedies package revealed details regarding Ripple’s past sales of XRP to institutional investors. The SEC claims that Ripple offered XRP at discounted prices to some institutions while failing to disclose this information to all buyers adequately. This alleged lack of transparency could have disadvantaged investors who purchased XRP at actual prices.
Legal expert Fred Rispoli (@freddyriz) believes that these discounted sales might contribute to XRP’s current low price. If the discounts were substantial, institutions that acquired XRP at significantly lower prices could be more inclined to sell their holdings during periods of price increase, creating downward pressure on the market. This potential for increased selling pressure could deter retail investors from holding XRP in anticipation of significant price gains.
…have already said the SEC's motion is full of mischaracterizations. Let's hope that is correct because the picture painted is not a good look for Ripple and lends credence to the $XRP haters on why the price is so low. Namely, the deep discounts by Ripple on XRP sales. 3/10
— Fred Rispoli (@freddyriz) March 26, 2024
Read Also: SEC to Unveil Latest Filing Against Ripple in XRP Lawsuit. Here’s When
Ripple’s Defense and Post-Lawsuit Sales
Ripple maintains that its post-lawsuit sales of XRP, particularly those associated with its On-Demand Liquidity (ODL) service, differ from the earlier sales to institutions that are the subject of the SEC’s lawsuit.
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The company has restructured its XRP sales and argues that ODL transactions are not securities sales and, as a result, are not subject to SEC regulations. Rispoli believes the stakes are high for this decision and hopes Ripple has truly changed its business practices.
With Ripple expected to file a reply brief to the SEC’s motion, the future of the lawsuit remains uncertain. The full details of Ripple’s response and any further information revealed by the court could significantly impact XRP’s price.
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