- Crypto exchanges Crypto.com, Coinbase and OKCoin said this week that they were suspending trading of the XRP token following a complaint by the Securities and Exchange Commission against its developer Ripple Labs.
- XRP fell 31% on Tuesday but is back around 23% again as of Thursday.
- Phil Liu, Arca’s chief legal officer, told Business Insider that XRP, the coin, “is falling into the grave with one foot.” “Ripple, the company, could be insolvent by the end of 2021 if it cannot raise funds by selling XRP and its other unprofitable products.”
- The lawsuit filed by the SEC is against Ripple, not XRP. “Whatever happens to Ripple, XRP will continue to exist,” said Michael Arrington, founder of TechCrunch, because it is “independent of the company.”
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Several cryptocurrency exchanges canceled trading of the XRP token this week following a complaint by the Securities and Exchange Commission against its developer, Ripple Labs.
Exchange and funding platforms, including Crypto.com, Coinbase and OKCoin, have said they will suspend the trading of the XRP token. According to The Block, Wirex, a digital payments company, and app Ziglu have followed suit.
The SEC complaint accused Ripple of running an unregistered supply of $1.3 billion through its sales of XRP, which the regulator deemed a security rather than a cryptocurrency.
“We have been closely monitoring the news surrounding the December 22 lawsuit against Ripple, the company behind XRP, and two of its key executives,” OKCoin said in a statement on Monday. “Given the progress of the lawsuit, we have decided that suspending XRP trading and deposits on OKCoin from January 4, 2021 is the best course of action.”
Coinbase said that “in light of the SEC’s lawsuit against Ripple Labs, Inc, we have taken the decision to suspend the XRP trading pairs on our platform.”
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XRP is down 31% on Tuesday, and has lost 75% in value since hitting a two-year high in early November, when investors took advantage of a weak US dollar to build up in cryptocurrencies.
As of Thursday, the coin has gained nearly 23% since Tuesday’s low.
Phil Liu, Arca’s chief legal officer, said the SEC lawsuit was a risk for the XRP token and even more dangerous for Ripple.
XRP is “falling into the grave,” Liu told Business Insider. “Ripple may be insolvent by the end of 2021 if it cannot raise funds by selling XRP and other unprofitable products.
“I don’t see a viable alternative to replace XRP sales except to get out of the US and exclude US investors from buying XRP. They will have to start from scratch, because all XRP profits will collapse since they all happened when Ripple was a US-based company.”
However, Michael Arrington, founder of TechCrunch and partner at Arrington XRP Capital, said that XRP will remain a viable token because Ripple does not own all of the XRP. The SEC lawsuit is against Ripple, not the XRP token.
“Whatever happens to Ripple, XRP will continue to exist. It exists independently of the company. It exists on the distributed ledger,” Arrington said.
Arrington said he believes the Securities and Exchange Commission wants to take the case to court to establish clearer guidelines on cryptocurrencies.
He also said it was unclear whether other members of the Securities and Exchange Commission or the Department of Justice felt the same way about Ripple as outgoing Securities and Exchange Commission Chairman Jay Clayton.
It is difficult to say what Clayton’s lawsuit means for the future of crypto regulation, said Chris Lavin, partner at law firm Weathers.
“This lawsuit was filed just before the management change,” Lavigne told Business Insider. “It’s a surprising measure in this regard.” “It is clear that there was no immediate need for enforcement action, and it is not clear how the new administration would view the case or the Commission’s overall implementation agenda in this area.”
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