- XRP comes under immense pressure, falling toward $2.09 as Israel and Iran escalate conflict.
- Ripple and the SEC file a joint motion requesting the release of $125 million held in escrow.
- The SEC would be paid $50 million as a settlement, with the remaining funds returned to Ripple.
Ripple’s (XRP) price is currently trading at around $2.14 at the time of writing on Friday as investors in the crypto market navigate the sudden spike in volatility triggered by geopolitical tensions in the Middle East. The sudden price drop, which saw the price of XRP slide below support at $2.20, triggered massive liquidations, exceeding $23 million over the past 24 hours.
The decline in the XRP price comes hot on the heels of the conflict between Israel and Iran. Israel launched an attack on Iran, targeting the country’s nuclear facilities, ballistic missile factories and military commanders on Friday, according to a report by Reuters.
Iran immediately responded to the attack, launching drone strikes on Israeli territory, prompting Israel to declare a state of emergency.
Ripple, SEC file joint motion to release $125 million held in escrow
Ripple and the United States (US) Securities and Exchange Commission (SEC) have jointly filed a motion in the US District Court Southern District of New York, requesting Judge Analisa Torres to dissolve the injunction in their ongoing case and move to release $125 million civil penalty held in escrow.
The two parties proposed in the motion that $50 million be paid to the SEC, with the remaining funds returned to Ripple, reflecting the settlement reached in early May. According to the filing, “if the Court issues the requested indicative ruling, the SEC and Ripple will move to the US Court of Appeals for the Second Circuit, for a limited remand to seek relief.”
The Court previously denied a Ripple-SEC joint motion on May 8, citing the failure of the two parties to address whether “exceptional circumstances” warrant a modification of the final Judgement, which had penalized Ripple $125 million for violating securities laws when the company sold XRP directly to institutional investors.
Meanwhile, institutional interest in XRP and related financial products continues to rise, as reported by FXStreet. Publicly listed companies, including VivoEnergy, Trident Digital Tech Holdings, Wellgistics Health, Inc., Webus International Limited, and Hyperscale Data Inc., have recently announced XRP-focused treasury fund strategies.
The cryptocurrency project, Ondo Finance, announced earlier this week the launch of its flagship Ondo Short-Term US Government Treasuries (OUSG) on the XRP Ledger (XRPL).
OUSG bridges the gap between Decentralized Finance (DeFi) and the traditional finance sector, allowing institutional investors on XRPL to seek exposure to short-term US Treasuries.
Technical outlook: XRP holds above critical support
XRP’s price hovers at around $2.14 at the time of writing after a slight recovery from support at around $2.09, reinforced by the 200-day Exponential Moving Average (EMA).
This rebound remains uncertain, especially with the Relative Strength Index (RSI) falling below the 50 midline while remaining below the descending trendline, as shown on the daily chart below.
Key levels of interest likely to be relevant in upcoming sessions and going into the weekend include the descending channel’s middle boundary, currently acting as immediate support, and the 200-day EMA at $2.09, which could prevent losses from extending below the critical $2.00 level.
XRP/USDT daily chart
If the geopolitical situation in the Middle East improves and sentiment in the broader cryptocurrency market shifts, traders may consider buying XRP and contributing to the tailwind. A rebound from the current price level of $2.14 could reinstate the goal of a recovery targeting the hurdle at $2.34 and the seller congestion at $2.50, representing a 17% move from the prevailing market value.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14, 2023:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and had to pay a $125 million civil fine.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
