XRP Tumbles as SEC Files Appeal in Ongoing Legal Battle with Ripple

The price of XRP, one of the world’s largest cryptocurrencies, plummeted on Thursday, a day after the Securities and Exchange Commission (SEC) filed an appeal challenging a 2023 court ruling that determined XRP is not classified as a security when sold to retail investors on exchanges. The renewed legal tension sent ripples through the market, with XRP falling more than 8% to 53 cents, according to Coin Metrics.

The SEC’s appeal has reignited concerns for Ripple, the largest holder of XRP, and its investors. Ripple had initially scored a partial victory in July 2023, following a grueling three-year legal battle with the SEC. U.S. District Judge Analisa Torres’ decision was considered a landmark moment for the cryptocurrency industry, declaring that XRP, when sold to retail investors, does not constitute a security. However, the same ruling stated that XRP sold to institutional investors is considered an unregistered security, complicating Ripple’s legal standing.

Ripple declined to issue an official comment, but company executives took to X (formerly Twitter) to express their frustrations. Stuart Alderoty, Ripple’s chief legal officer, remarked that the SEC’s decision to appeal was “disappointing, but not surprising,” and said the company is considering filing a cross-appeal. Ripple CEO Brad Garlinghouse was more pointed, stating, “XRP’s status as a non-security is the law of the land today – and that does not change even in the face of this misguided – and infuriating – appeal.”

The SEC, under the leadership of Chair Gary Gensler, has been criticized for its hardline stance on regulating the cryptocurrency industry through enforcement actions rather than providing clear guidance. The appeal marks the latest chapter in the SEC’s ongoing efforts to rein in the sector, adding further uncertainty to XRP’s long-term legal standing and potentially reshaping the crypto regulatory landscape.

Meanwhile, Ripple’s token saw significant volatility. XRP, which was created by Ripple’s founders and serves as the native token for its open-source XRP Ledger, is central to the company’s cross-border payments business. Despite the legal setbacks, XRP remains the fifth-largest cryptocurrency by market capitalization, trailing behind other giants like Bitcoin and Ethereum.

In a notable development, Bitwise Asset Management, a key player in the cryptocurrency exchange-traded fund (ETF) space, submitted a registration filing earlier in the week for the first-ever XRP ETF—just days after launching an XRP trust product in Delaware. Grayscale, another heavyweight in the crypto ETF market, had introduced a similar XRP trust in September.

Elsewhere, the broader crypto market showed mixed results. Bitcoin climbed 1% to $60,941.60, while Ether saw a slight dip of more than 1%, trading at $2,350.24. Crypto-related stocks, including Coinbase and MicroStrategy, also showed minor declines, each down by less than 1%.

As the legal battle between Ripple and the SEC intensifies, all eyes will remain on the future of XRP and the precedent this case could set for the rest of the cryptocurrency market. For now, Ripple’s community and investors are left navigating turbulent waters, as the SEC’s appeal introduces fresh uncertainty in an already volatile space.

Digital Asset Desk