Ripple, the US-based cross-border payments firm, has made notable changes to the way it sells its XRP holdings to institutional investors, according to the recently released Q4 2023 XRP markets report.
This proactive change, made before the court ruling on July 13, 2023, which declared XRP not a security, could have major implications for the lawsuit and the future of the token.
Despite not performing well like other popular cryptocurrencies, XRP experienced a remarkable surge in spot trading volume during Q4 2023, averaging an impressive $600 million per day. However, the focus of the report is on the legal battle and Ripple’s response to the court’s ruling.
Significance Of Timely Change On XRP Lawsuit
While the court ruled that XRP is generally not considered a security, it did highlight past sales by Ripple to institutional investors as problematic, potentially qualifying as investment contracts. This distinction is now being debated in the “remedies phase” of the lawsuit, where potential penalties for those past sales are being discussed.
The report reveals that Ripple took proactive measures to change its sales model to institutional investors before the court’s ruling. This means that the sales identified as “unlawful” by the judge no longer represent Ripple’s current practices.
The Old vs. The New: A Big Shift
In the past, Ripple directly sold XRP to institutions through written contracts, amounting to a significant $729 million. These sales were considered investment contracts because buyers expected to profit from Ripple’s efforts to increase the value of XRP.
However, Ripple has now transitioned to a new model that focuses on facilitating low-cost, rapid ODL transactions. Under this new approach, buyers acquire XRP only for a few seconds, eliminating the investment aspect and any expectation of making a profit. This change aligns with the court’s definition of security.
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Potential Impact: Navigating Uncertainty
As the “remedies phase” progresses, the absence of evidence for post-ruling “unlawful” sales under the new model could weaken the SEC’s arguments and support Ripple’s ongoing sales. However, the ongoing legal battle creates uncertainty for investors.
Ripple’s proactive strategy demonstrates its commitment to compliance and showcases its ability to adapt.
This bold move by Ripple not only shows its dedication to following regulations but also highlights its ability to navigate the complex legal landscape. As the legal battle continues, the future of XRP remains uncertain, but Ripple’s proactive approach sets a precedent for adaptability and innovation in the world of cryptocurrency.