ripple (CCC:XRP-USD) His way was a bit rocky as a project. The coin has fallen from a peak of over $3 in early 2018 to about 45 cents now. Compared with Bitcoin (CCC:BTC-USD), Ripple appears to be even worse, as the price of Bitcoin has more than doubled over the same period.
However, we must give some credit to Ripple. It is still the sixth largest crypto asset despite its poor performance in recent years. Besides, it has managed to hold this spot despite being under fire from the Securities and Exchange Commission (SEC).
In the Wild West, the space of crypto, speaks of the strength of Ripple that it was able to withstand a blow like this and keep moving forward.
SEC take aim
On December 22, the Securities and Exchange Commission launched a major executive action against Ripple. It alleges that Ripple management sold $1.3 billion in unregistered securities to the public without proper disclosure. More specifically, the Securities and Exchange Commission states in part that:
Ripple raised funds, starting in 2013, by selling a digital asset known as XRP in unregistered securities offered to investors in the US and around the world. […] According to the complaint, in addition to structuring and promoting sales of XRP used to fund the company’s business, [Ripple co-founder] Larsen and [CEO] Garlinghouse has also made unrecorded personal XRP sales totaling around $600 million. The complaint alleges that the defendants failed to register their offers and sales of XRP or meet any exemption from registration, in violation of the registration provisions of federal securities laws.
The Securities and Exchange Commission has a clear disclosure process necessary to list securities for sale to US investors. In this case, the Securities and Exchange Commission (SEC) accuses Ripple of failing to meet regulatory guidelines. In addition, Ripple insiders have supposedly cashed in $600 million in unregistered securities. If true, this is a major breach of proper operating procedures and could be a major negative for Ripple in general.
There is an issue central to the work of the Securities and Exchange Commission. The Securities and Exchange Commission says Ripple sells shares to the public rather than currency. Precious metals such as gold and silver have always operated in a different regulatory environment because they are solid assets and not shares of a working entity. But in this case, the SEC says Ripple is behaving like a company, issuing tokens to fund its operations. Therefore, XRP falls within its regulatory framework, unlike currencies, this is a different matter.
Ripple has acknowledged that several exchanges have stopped trading the Ripple currency following the Securities and Exchange Commission’s move. Overall, Ripple revealed that 33 different companies have taken restrictive actions against Ripple as a result. US exchanges have been particularly quick to stop trading the Ripple token, as it is legally questionable to buy and sell securities that are not authorized in the US.
Trading volumes are going up anyway
Despite this huge blow to the business, Ripple has continued to operate. XRP net sales nearly doubled for the last quarter. She stated that strength in the Asia-Pacific region more than offset the loss of business in North America. The volume of XRP increased by an even larger amount. Admittedly, a lot of that is probably due to the massive rise in cryptocurrencies in general rather than any particular confidence in Ripple.
However, it was easy to see a scenario where the use of Ripple would decline the moment it was subjected to regulatory suppression. This did not happen. This only bodes well for the future prospects of the project. If Ripple can quickly find a way to settle with the SEC and move forward from that, it could start to recover more of its losses from the 2018 peak and beyond.
Personally, I tend to shy away from SEC-regulated investments. There is a lot to buy in the world, so there is no need to rush into XRP or anything else the subject of an active government investigation.
However, you have to respect Ripple for continuing to post strong usage numbers recently despite the SEC campaign. Normally, you would expect losing all of these exchanges to have a greater impact on Ripple. However, it seems that her community is still very active. That might make Ripple worth another look if and when they are able to settle the SEC’s complaint.
At the date of publication, Ian Besik did not (directly or indirectly) hold any positions in the securities mentioned in this article.
Ian Besik has written over 1,000 articles for InvestorPlace.com and is searching for Alpha. He also worked as a junior analyst at Kerrisdale Capital, a $300 million New York City hedge fund. You can contact him via Twitter at irbezek.