Ripple vs SEC: Can the SEC’s $2 Billion Warning Crush XRP’s Price?
Article Rewrite:
Key Points:
– Ripple may be forced to sell a significant amount of XRP to pay a potential $2 billion fine, leading to a drop in the coin’s value.
– Concerns have been raised about Ripple’s regular XRP sales impacting the coin’s performance.
– Some experts advise holding onto XRP despite its underwhelming performance, while others suggest selling for better returns elsewhere.
Legal expert Jeremy Hogan has raised concerns about the Securities and Exchange Commission’s (SEC) pursuit of a $2 billion penalty against Ripple in their ongoing legal battle. Hogan warns that if Ripple is required to comply with such a substantial fine, they may have to sell off a large portion of their XRP holdings, which could potentially lead to a further decline in the coin’s value.
Hogan argues that this outcome would not only harm retail investors but also contradict the SEC’s goal of protecting investor interests. He specifically points to the SEC’s call for a final judgment, which seeks a significant fine against Ripple for alleged violations of federal securities laws related to its institutional sales. If the court agrees with the SEC’s request, Ripple would be compelled to sell a substantial amount of XRP, negatively impacting its value and affecting retail investors.
Despite recent legal progress, XRP’s performance has been lackluster, raising concerns among investors. Many attribute this underwhelming trajectory to alleged price suppression resulting from Ripple’s monthly XRP sales. While Ripple regularly releases 1 billion XRP from its escrow accounts each month, there is limited evidence linking these sales to the coin’s underperformance.
In the midst of this uncertainty, Vandell Aljarrah, co-founder of Black Swan Capitalist, advises XRP holders to hold onto their investments despite the coin’s poor performance. He disagrees with Joshua Jake’s advice on the Discover Crypto channel, which suggests selling XRP tokens. Jake’s recommendation is based on XRP’s recent performance compared to other alternative coins, suggesting that investors explore alternative assets to optimize returns. However, XRP has only experienced a modest 5.29% increase over the past 90 days, significantly lagging behind its competitors.
Looking ahead, if the court sides with the SEC and imposes the $2 billion fine on Ripple, the company may need to sell approximately 3.22 billion XRP coins at the current market price of $0.62 per coin to raise the necessary funds. However, Ripple could potentially use its reported $1 billion cash reserves, as disclosed by CEO Brad Garlinghouse earlier this year, to cover the penalty and mitigate the immediate impact on XRP’s market dynamics.