The Securities and Exchange Commission in December 2020 sued Ripple Labs, the company whose founders helped create the cryptocurrency XRP. The agency alleged that the business and two executives raised over $1.3 billion through an ongoing offering of unregistered securities. While the price of XRP saw a brief dip after the announcement, the token rebounded the following spring.
Now, with a decision on the lawsuit expected later this year, XRP is riding a month-long price surge—and Ripple said that it sold $226 million worth of the token in a quarterly report it published Monday.
“Ripple remains one of the few crypto firms well capitalized and ready to meet robust customer demand in 2023,” the company wrote.
The token increased to approximately 40 cents on Wednesday from about 33 cents at the beginning of the year, according to data from CoinMarketCap. Ripple, which uses the coin for its various payment services, also reported a rise from the previous quarter in the number of new wallets on the XRP blockchain and a slight rise in the amount of transactions. The company’s services include processing remittances and cross-border payments.
Central to the government’s allegations is a claim that XRP is a security, and that, through Ripple’s sales of the token, the company is all but selling shares without notifying the SEC. In a legal back-and-forth, Ripple has strenuously disagreed, arguing that XRP, created in 2012 as an alternative to Bitcoin, is a commodity and therefore not subject to SEC jurisdiction.
In its quarterly report, Ripple said it expects to see a ruling this year. CEO Brad Garlinghouse, one of two executives named in the lawsuit, even said it’s possible to see a result in the first half of 2023. As of last Wednesday, the court battle rages on, with lawyers battling over the government’s motion to exclude the testimony of one of Ripple’s expert witnesses.
XRP is one of the largest cryptocurrencies by market capitalization, and the result of the SEC’s lawsuit against Ripple could have significant ramifications. The judge’s decision could radically alter—or in some cases destroy—other crypto-related firms. The SEC reportedly has launched investigations into Binance and BNB, the native token that supports the world’s largest cryptocurrency exchange by trading volume, and into Yuga Labs, the startup most famous for Bored Apes and whose ApeCoin supports other projects it’s developing.
The industry has rallied to Ripple’s defense, including Coinbase, the second-largest cryptocurrency exchange by trading volume.
“Ripple is proud of its defense and feels more confident than ever as it awaits the Judge’s decision,” the company wrote in its quarterly report.
A spokesperson for Ripple did not immediately comment on the report or the recent price increase of XRP when reached by Fortune.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
Read More
Despite ongoing litigation with the U.S. Securities and Exchange Commission (SEC), Ripple announced this week that the company sold $226 million in XRP tokens during the first three months of 2021.
Ripple is an enterprise software solution provider whose technology aims to provide an efficient and secure platform to transfer money. The company developed their own cryptocurrency, XRP, to facilitate global payments and settlements.
Despite the high volume of XRP sales, the total transaction volume remains low compared to various other major cryptocurrencies. The token sale generated approximately $400 million for Ripple, illustrating the company’s increasing focus on monetizing the asset.
This sale comes at a tumultuous time for the company which is currently involved in a lawsuit with the SEC. The SEC alleges that Ripple has been selling XRP without registering with the SEC as a security. To date, the lawsuit has forced Ripple to suspend its XRP sales, but the company remains hopeful that it will win the case.
Despite the ongoing legal challenge, Ripple’s sale of XRP is an encouraging sign that the asset may soon have greater regulatory clarity. As the SEC works to clarify its stance on digital assets, it is likely that Ripple will continue to take a proactive approach to XRP marketing.
In the meantime, investors should remain wary of the risks associated with investing in XRP and other digital assets, as the regulatory landscape is still evolving.
