How the outcome of the Ripple case will affect the crypto market after new lawsuits from the SEC
Interviewed experts told how the outcome of the Ripple case will affect the crypto market after new lawsuits from the SEC
Experts talked about the prospects and consequences of the end of a multi-year lawsuit in the context of the regulator's new lawsuits against the exchanges Binance and Coinbase
Securities and Exchange Commission (SEC) lawsuits against the two largest crypto exchanges Binance and Coinbase are not the first precedent of confrontation between the regulator and major crypto-business players. The agency has been suing Ripple for years, and judging by a number of indications, the denouement of the case could happen soon.
Over the years, the SEC's case against Ripple has become one of the most important proceedings in the industry, its end result could have serious implications for the rules for the circulation of digital assets in the United States.
In May, the court denied the SEC's motion to classify portions of the documents in the case against Ripple. Ripple CEO Brad Garlinghouse said that letters from one of the agency's former top executives, Bill Hinman, which may contain information important to the case, would soon be made publicly available.
Part of the litigation centered on documents related to a 2018 speech by former SEC Director of Corporate Finance Bill Hinman, which included remarks about why he did not consider cryptocurrencies to be securities. The SEC tried to withhold documents and communications related to Hinman's speech, claiming that his words reflected personal views and not agency policy. Ripple's lawyers tried for much of the trial to gain access to the documents in order to build a defense strategy around them.
Interestingly, all of Hinman's background information was removed from the SEC website last week. According to lawyers interviewed by reporters from industry publications, as early as June 13 during the next court hearing, his materials could be made public, which could dramatically affect the course of the case.
"I don't think Ripple will lose the trial. Litigation of this magnitude in the U.S. usually lasts for years, and I don't think that new lawsuits [against Binance and Coinbase] can radically turn the course of the litigation, which in recent months has clearly turned not in favor of the American regulator," says ENCRY Foundation co-founder Roman Nekrasov.
Ripple's victory in the proceedings with the SEC will be a landmark event for the entire crypto industry because until now, US regulators have come out victorious from court proceedings or pushed through some kind of pre-trial agreements that benefit them rather than the industry. This has created a general feeling that it is impossible to compete with regulators and prove one's case. If Ripple wins, there will be a precedent demonstrating that cryptocurrencies have a chance to emerge from the battle of a winner.
"Against the backdrop of the general tightening of cryptocurrency regulation in the world and in the U.S. in particular, this is positive encouraging news. Undoubtedly, it will have a positive impact on the XRP rate, but I would not expect a sharp significant growth of the token rate. - Nekrasov argues, - The fact that Ripple is unlikely to lose in court was discussed in late 2022, the trial simply can not be fast.
As for the overall situation on the crypto market, it is now dominated by macroeconomic news, bitcoin is unlikely to react with a sharp increase on the successful completion of the Ripple lawsuit against the SEC, Nekrasov said. The litigation between the SEC and major cryptocurrency exchanges Binance and Coinbase, in his opinion, will have a more tangible negative impact on the first cryptocurrency.
The litigation between the SEC and Ripple has recently been overshadowed, agrees cryptocurrency market analyst Viktor Pershikov. Investors are not so much concerned about an individual project, but rather about the overall situation around the crypto industry in the United States.
"The SEC is actively pushing big projects like Binance and Coinbase, and that is why this situation is more important now than the decision on the Ripple case. I believe it is unlikely that the XRP token itself will be recognized as a security, but the Ripple project may be fined for one or another miscalculation in dealing with American investors," the expert admits.
In lawsuits against exchanges Binance and Coinbase, the SEC has a number of charges against both companies, chief among them is the recognition of a number of cryptocurrency assets that are traded on the sites, unregistered securities, falling under the jurisdiction of the regulator. The XRP token, of the two exchanges, is traded only on Binance and is not mentioned in the lawsuit against the platform. The coin is one of the top 10 largest crypto-assets on CoinMarketCap with a market capitalization above $27,5
In the lawsuit against Binance on June 5 and the lawsuit against Coinbase on June 6, the regulator named several cryptocurrencies as securities.
In the first case, these were: Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI).
In the second, Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), NEAR Protocol (NEAR), Voyager VGX (VGX), Dash (DASH), and NEXO (NEXO) were added.
According to Pershikov, the outcome of the Ripple v. SEC case will determine not so much the prospects of the XRP token itself, but the situation in the cryptocurrency industry as a whole. If the Ripple project token is recognized as a security, it will set a serious precedent and put a lot of pressure on market capitalization, as many investors are betting on cryptocurrencies as an alternative to U.S.-regulated assets.
A loss in court would have a significant impact on the prospects of the Ripple project, which actively offers services to various financial and banking organizations around the world, and would negatively affect the XRP rate, the analyst said. On the other hand, if the court rules in favor of the project and finds that XRP is not a security, it will be a positive factor and the cryptocurrency will receive support in the light of recent events surrounding the SEC and crypto projects in the U.S.
There are also discussions among members of the cryptocurrency community that Ripple may try to go for an IPO after the court process is over. Fox Business reporter Eleanor Terrett reported on June 2 that her sources said Ripple held a road show where it met with underwriters and other investors to generate interest in a potential public offering.
It also became known that in the first quarter of 2023, Ripple acquired a minority stake in cryptocurrency exchange Bitstamp, previously owned by Pantera Capital, a major U.S. cryptocurrency-focused investment fund.
Buying a stake in Bitstamp fits in with Ripple's overall strategy, which aims to change the format of cross-border cash flows with the help of blockchain, says Roman Nekrasov. The exchange is one of the important infrastructural links in the chain of payments, transfers, and money flows. Other links are Metaco cryptocurrency, which was recently purchased by Ripple for $250 million, and the Tranglo payment system, where Ripple has a 40% stake.
According to Pershikov, Ripple's planned IPO is due to the fact that the company wants to gain a maximum foothold in the U.S. financial market and attract additional funding, as it has obviously faced a shortage of it, including against the background of investors' reluctance to support the project, which is sued by the SEC.
"On the one hand, the IPO is a marketing story for Ripple, on the other hand - an opportunity to raise funds, on the third - the right to be considered a regulated financial services provider. - At the same time, the probability of IPO in case of loss by the SEC in court will be very low, so in the interests of the project to accelerate the process, because the risks in the light of the uncertainty of Ripple in the U.S. is growing every day.
If the project manages to enter the U.S. exchange, it is unlikely to be an event similar to Coinbase listing, Pershikov believes, and will be decisive for the project itself rather than the cryptocurrency market as a whole.
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