While the cryptocurrency market is in the red, Ripple’s XRP is nearly posting a price increase of around 30%. What are the reasons for this singular rise?
XRP’s price is rising sharply
While all crypto-currencies are showing a declining price over the last week, including Ether (ETH) which lost 20% following the Merge, XRP has risen 27% over the same period.
XRP is the cryptocurrency of the company Ripple, which works for a decentralized international payment solution.
The rise in the XRP price can be explained by various factors. The main reason is most likely the recent twist in the lawsuit between Ripple and the US Securities and Exchange Commission (SEC).
Indeed, a legal battle was initiated in 2020 by the US financial regulator against Ripple and 2 of its executives, accusing them of having sold XRP tokens, classified, according to the SEC, as unregistered securities.
This case goes far beyond Ripple’s case alone, since if the judge in charge of the final decision rules in favor of the SEC, the latter could then initiate legal proceedings against crypto-currencies closely resembling XRP.
But recently, the 2 parties filed a motion for summary judgment, a legal process used so that the court of competent jurisdiction can make a decision based on the established facts without waiting for a trial to be completed.
A surge of optimism for Ripple and XRP
It appears that the SEC is having trouble proving that XRP can be classified as a financial security, according to some Ripple representatives.
As such, Stuart Alderoty, a member of Ripple’s general board, tweeted to express what could be likened to an admission of failure by the SEC.
“My take – after two years of litigation, the SEC is unable to identify any investment contract (that’s what the law requires); and can’t meet a single test of the Supreme Court’s Howey Test. Everything else is just noise.”
The same is true of Brad Garlinghouse, Ripple’s CEO, who also commented on Twitter:
“Today’s filings make it clear that the SEC is not interested in enforcement. It wants to redo everything in an unconscionable effort to expand its jurisdiction far beyond the authority granted to it by Congress.”
In addition, Ripple also defended itself by stating that XRPs could not be considered financial securities in that they are not tied to any investment contract. Therefore, investors would not have any special rights with respect to the XRPs acquired.
It remains to be seen how the lawsuit will evolve, which in either case will not leave the market indifferent.