Ripple's battle with the U.S. Securities and Exchange Commission (SEC) has become one of the most high-profile legal battles in the cryptocurrency industry. In December 2020, the SEC filed a lawsuit against Ripple, accusing the company of illegally selling $1.3 billion worth of XRP tokens, arguing that XRP is a security and not a cryptocurrency. Let's take a look at how this case has affected Ripple and the prospects for the outcome.
Since the lawsuit was filed, the price of XRP has plummeted by 70%, but the coin has since recovered. At the time of writing, XRP has a market cap of about $20 billion, with daily trading volume reaching $2 billion. This indicates significant liquidity and interest in the token despite the lawsuit.
The SEC's main claims concern that Ripple sold XRP without registering it as a security. If the court sides with the commission, it could set a dangerous precedent for the entire cryptocurrency industry, putting other projects with a similar token model at risk. Ripple, in turn, claims that XRP functions as a cryptocurrency and is used in cross-border payments.
A positive ruling in favor of Ripple could not only strengthen XRP's position, but also lead to a massive revision of crypto regulation in the U.S. If the court sides with the SEC, it could cause the price of XRP to fall and force many crypto companies to reconsider their token issuance strategies.
The key outlook depends on the outcome of the trial, but even amid the uncertainty, XRP maintains a strong user base and is showing growth on the back of positive news about a possible Ripple victory in court.