The value of one of the world’s most valuable cryptocurrencies is crashing and a recently filed SEC complaint is at the root of the free fall. According to CoinMarketCap, the XRP token’s value has declined more than 42% in the past 24 hours and is down more than 63% from its 30-day high of $0.76. It now sits at just $0.27.
XRP’s price volatility has rivaled the most capricious of cryptocurrencies. Since reaching an all-time-high of $3.84 back in January of 2018, the coin has spent much of the past two years drifting closer and closer to pennies. In the past month, on the back of major rallies from other cryptocurrencies, XRP has seen its biggest rally in years, but those gains were all erased this week by the Ripple CEO Brad Garlinghouse’s admission that the SEC was planning to file a sweeping lawsuit against the company during the current administration’s final days.
The SEC’s fundamental argument is that XRP has always been a security and that it should have been registered with the commission from the beginning more than seven years ago. The SEC claims that the defendants in the case — namely the company Ripple, CEO Bran Garlinghouse and executive chairman Chris Larsen — generated more than $1.38 billion from sales of the XRP token.
Ripple was recently valued at $10 billion following a $200 million funding round. Ripple and the XRP token are technically separate, but Ripple maintains a significant total of the currency’s market cap and at one point the XRP token itself was referred to as “ripple” and shared a logo with the company.
The company’s line has been that XRP is not a security but is, in fact, a tool for financial institutions, though the coin’s volatility has discouraged banks from actually adopting the token. Meanwhile, XRP is present on a number of cryptocurrency exchanges, a fact which could expand the scope of this legal complaint and affect more players in the space.
In a blog post published yesterday that went live shortly after the SEC’s suit was filed, Garlinghouse wrote that the SEC’s claims were “completely wrong on the facts and law’” and that the company was “confident” they would “ultimately prevail before a neutral fact-finder.”
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