Ripple Unveils Potential Alterations in XRP Sale
Ripple has recently implemented significant changes to its strategy for selling XRP to institutions, as revealed in its latest quarterly report for Q4 2023. This update is in response to a crucial ruling on July 13, 2023, which determined that XRP is not a security, although certain previous sales to institutions were found to have violated securities regulations.
Even prior to the court ruling in July, Ripple had already shaken up its approach to XRP sales. Now, all sales will adhere to the legal standards set by the court. This adjustment marks a shift in Ripple’s sales practices to align with court requirements.
Before the trial, Ripple laid out its plan for selling XRP in the report. The report highlights a resurgence in spot trading volume for XRP during Q4, averaging $600 million per day. Despite underperforming compared to major cryptocurrencies like Bitcoin and Ethereum, which saw substantial gains, XRP managed to finish Q4 2023 with a 19.5% increase.
According to the Q4 report, Ripple changed its method of selling XRP to institutions prior to Judge Torres’ ruling. Previously, Ripple directly sold XRP to institutional buyers under written contracts, amounting to $729 million worth of XRP, which the court deemed an investment contract.
The new model implies that buyers now acquire XRP solely for facilitating quick and low-cost transactions, holding the asset for only a short period. This shift in sales strategy suggests that recent or ongoing sales to institutions are not subject to the same securities regulations as previous transactions. Therefore, the documents requested by the SEC during the remedies phase of the case may not provide any evidence implicating Ripple in relation to this revised sales strategy.
If Ripple’s updated sales model is confirmed, it could potentially mitigate further regulatory penalties or sales bans, allowing the company to continue its current operations without disruption.
In response to recent developments in the SEC lawsuit, Ripple is ensuring that its XRP sales meet legal standards. The SEC has requested Ripple’s financial records to determine the possibility of an injunction that could restrict future XRP sales.
Concerns have arisen within the XRP community regarding potential restrictions on On-Demand Liquidity (ODL) customers if an injunction is imposed. However, Attorney Bill Morgan has reassured ODL clients that they can access XRP from alternative sources.
As the case enters the remedies phase, both the SEC and Ripple will submit remedies-related briefs from March to April 2024, with the court ultimately deciding on appropriate remedies for Ripple’s violations of securities laws.
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Ripple (XRP)