Ripple’s XRP fell after the SEC announced a lawsuit against them.
Some crypto exchanges have removed the token to avoid scrutiny.
Suspicions of embezzlement are growing in the community
After one of the most anticipated airdrops in crypto history, XRP is under the control of the US federal government. With prices falling and exchange write-offs, XRP is facing trials like never before.
On December 22, 2020 , Ripple announced that they expected legal action to be filed against them by the US government. The Securities and Exchange Commission (SEC) was to argue that XRP, Ripple’s token, was a security. Since Ripple sold its token without going through official channels, this meant that XRP was being sold illegally. A day later, the SEC officially accused Ripple of illegally raising $ 1.3 billion.
However, the validity of the trial does not depend on the definition of XRP. According to the lawsuit, the XRP fundraiser turned out to be an illegal sale of a security. If it’s proven that XRP is a currency – as Ripple claims – rather than an asset, then Ripple could be exonerated.
Although the surprise announcement caused the value of XRP to drop, there were already some warning signs.
It didn’t come out of nowhere
Ripple Labs officials have been warning for some time of possible friction with US regulators. Truth be told, on December 3, 2020, Ripple CEO Brad Garlinghouse appeared on CNN and said that the regulatory status of XRP was unclear. At the time, Garlinghouse expressed concern about the company’s ability to operate in the United States. However, he added that only 5% of Ripple’s customers are located in the United States.
Other major cryptocurrencies, such as Ether ( ETH ) and Bitcoin ( BTC ), have been explicitly labeled as non-securities by the SEC. The XRP , which according Ripple, will be used for large financial transactions, could easily be considered a currency. Until the lawsuit was made public, there was no reason to say for sure that the SEC would attempt to label XRP in this way.
And yet, she did. As a result of this announcement, the price of XRP fell 36% in one day, falling to as low as $ 0.27 as of December 24. Its recent highs had been around $ 0.79.