The US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and its two executives for conducting $1.3 billion unregistered securities offering in the form of XRP. Following the news, some crypto exchanges started to delist XRP. Consequently, the price plummeted to as low as $0.22 on 24 December. The price is currently trading above $0.26 after buyers jumped in to accumulate the fourth-largest cryptocurrency at a discounted price.
The cryptocurrency market is in panic. The overall market cap dropped by more than $50 billion in less than 24 hours as Bitcoin, Ethereum, Bitcoin Cash and Chainlink also joined in the sell-off. There is no doubt about the fact that the recent negative sentiment is due to the uncertainty caused by the SEC. Despite the reason that SEC recognized Bitcoin and Ethereum as a payment system, the retail investors are selling their holdings in fear of a major crash.
The Crypto Community Reacted Strongly
The SEC received criticism from the crypto community for its recent action against Ripple as the community expected a clear regulatory framework instead of the lawsuit.
Khurram Shroff, Chairman of a Dubai-based investment firm IBC Group, expressed his views with Finance Magnates regarding the latest developments. “XRP is the fourth- largest crypto in the world and the only one based in the US. I would have advised the regulator to take a softer approach towards Ripple and should have been given an opportunity to register it as a security instead of a lawsuit. Given that it is a US-based global pioneer in Blockchain. This will hurt not only the US adoption of blockchain but will depress the global cryptocurrency economy, handing more power to China over the cryptocurrency world.”
XRP Buyers Getting Ready
During this difficult time, not everyone is selling crypto assets, some people have identified this as an opportunity to buy at a lower price. We have not seen a piece of institutional news in the last couple of days, but some retail investors are slowly increasing their XRP holdings. Johnny McCamley, Founder of CryptoClear told Finance Magnates that he expects XRP to get regulatory clarity soon.
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“The SEC suing Ripple simply delays the inevitable that XRP gets regulatory clarity and is deemed: NOT a security. What this headline does do, however, is scare retail investors into selling and scare the new investors from buying XRP. I have bought more XRP at ‘discounted prices’ around $0.22 USD as I know the long-term value of XRP. As an investor, I take the opposite stance of most. Investors want to invest in XRP when XRP has 3x in value, I still invest at these levels, but my point being the average investor will get scared when it decreases by 3x in value, the opposite should be true, I buy more than usual when there is ‘blood on the streets’ so to speak,” McCamley said.
He added that the recent lawsuit is actually helpful for XRP. “This lawsuit will fast-track the regulatory clarity that XRP needs that BTC and ETH have. Both Bitcoin and Ethereum have been declared NOT a security in the US. [It is] unfortunate that it needs to go this route, but I’m confident that Ripple will prevail. It’s in the best interest of the United States and the future of digital currencies. XRP will get regulatory clarity sooner than expected, regulation is closer than ever, especially with Sandie O’Connor who joined Ripple’s Board of Directors. O’Connor has over 30 years of leadership experience with a deep background in finance, treasury, capital markets and regulatory affairs. I can only see this lawsuit going one way- [the] outcome determining XRP is NOT a Security,” the Founder of CryptoClear added.