What Will Happen to the XRP Price if Ripple Loses its Case Against the US SEC
TL;DR
- If Ripple loses the SEC lawsuit, XRP’s price could drop significantly, and the entire cryptocurrency market might experience increased volatility.
- The regulator initially sought a $2 billion penalty, but the latest proposal is $102.6 million, while the company argues for a fine not exceeding $10 million.
The Possible Effect
The lawsuit between Ripple and the US Securities and Exchange Commission (SEC) entered its trial phase in April this year.
Some might see the company with the upper hand, considering its three partial court wins secured throughout 2023. However, the regulator also has a chance to emerge victorious. As such, we decided to ask ChatGPT what would happen to XRP’s price if Ripple lost the case.
The AI-powered chatbot estimated that such a resolution could lead to a significant drop in the asset’s value since “investor confidence may be shaken.”
Ripple might also face hefty fines and be required to amend its operational practices, which could significantly harm its reputation and result in reduced adoption and use of XRP.
ChatGPT further claimed that a victory for the SEC would mean Ripple’s native token classifies as a security, leading to stricter regulatory oversight. Affecting the employment of XRP in global financial services and cross-border transactions may also be among the setbacks.
Last but not least, Ripple’s potential loss could negatively affect the entire cryptocurrency market.
“The decision could trigger significant market volatility, with potential declines in the prices of various cryptocurrencies due to increased uncertainty and fear of further regulatory actions,” ChatGPT concluded.
From $2 Billion to $102 Million
The size of Ripple’s potential penalty has become a major issue in the lawsuit. Initially, the SEC sought a staggering $2 billion fine on the firm, accusing it of conducting an unregistered securities offering by selling its XRP token.
Ripple opposed the idea, claiming the amount should not exceed $10 million. One of its main reasons is that there are no direct allegations of fraud in its case against the agency (unlike the one between the SEC and Terraform Labs, where the defunct crypto firm agreed to pay a $420 civil penalty).
Most recently, the Commission softened its tone, proposing a $102.6 million penalty:
“Ripple avoids comparing the Terraform settlement’s penalty to the gross profit of the violative conduct. That ratio ($420 million/$3.587 billion) is significantly higher: 11.7%. Applying it to the $876.3 million in gross profits, the SEC here asks the court to disgorge, which results in a much larger figure, a $102.6 million penalty, than the $10 million ceiling Ripple insists on.”
The lawsuit between Ripple and the SEC is complicated and dates back to December 2020. Those curious to learn about its specifics and possible impact on XRP’s price, feel free to take a look at our dedicated video below:
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