XRP Investor Confidence Surges Amid SEC Court Battle

XRP has been at the center of a legal storm as the Securities and Exchange Commission (SEC) and Ripple Labs engage in a high-stakes courtroom battle, with investor confidence hanging in the balance.

The digital asset, often associated with the company Ripple, has seen a surge in investor confidence despite—or perhaps because of—the increasing scrutiny from the U.S. Securities and Exchange Commission (SEC).

XRP’s Recent Performance

On Thursday, June 27, XRP made a modest gain of 1.21%, closing the session at $0.4754. While this positive movement aligned with the broader crypto market, XRP still lagged behind its peers. The pending verdict from the SEC vs. the Ripple case and the SEC’s plans to appeal the Programmatic Sales of XRP ruling remained significant headwinds for the token.

The SEC vs. Ripple Case

Investors eagerly awaited the court ruling on the penalty for XRP’s alleged breach of US securities laws. In March, the SEC filed an opening brief seeking an almost $2 billion penalty and an injunction prohibiting XRP sales to institutional investors. In its reply brief, Ripple argued against continued violations and proposed a $10 million penalty. Notably, Ripple emphasized the lack of fraud allegations in the case.

The court’s interpretation of post-complaint activity will play a crucial role. If the court agrees that post-complaint XRP sales were to accredited institutional investors exempt from US securities laws, Ripple may avoid an injunction and face a lesser penalty. The Howey Test, established by the US Supreme Court, provides criteria for determining whether an asset qualifies as an investment contract (and thus a security). Ripple must demonstrate that it fails to meet one of the four points, including the expectation of profit. Ripple contends that its ODL (On-Demand Liquidity) contracts explicitly prevent profits, aligning with securities laws.

SEC Faces Court Criticism

Adding to the intrigue, the SEC faced backlash from the courts. Meanwhile, Ripple’s Chief Legal Officer, Stuart Alderoty, has not shied away from voicing his criticisms of the SEC. On June 27, Stuart highlighted another court ruling that accused the SEC of unlawfully rescinding a rule on proxy advisory firms without adhering to the Administrative Procedure Act, saying, “Another court slams the SEC,” in the X tweet. Simply put, the SEC got slammed for unlawfully rescinding a rule without proper procedure. 

This development further fueled investor skepticism about the SEC’s handling of the case, with some, like @XRP_Avengers on X (formerly Twitter), expressing optimism.

As the legal saga unfolds, XRP investors remain on edge. The court’s decision will shape XRP’s future, potentially redefining its regulatory standing. It’s a turning point that could cement the SEC’s authority over the crypto market or embolden the industry to push for clearer regulations. For now, the crypto community watches closely, balancing optimism with caution. The outcome could significantly impact Ripple’s expansion plans in the US and set a precedent for other digital assets facing regulatory scrutiny.