- Ripple and the XRP ecosystem are uptight with a potential judgment in SEC lawsuit looming.
- Ripple has argued its case for a $10 million settlement, XRP price shows an uptick.
As the week begins, investors await judgment on Ripple’s XRP in its ongoing legal battle with the US Securities and Exchange Commission (SEC). Notably, the SEC is expected to file a remedy-related reply brief today, May 6, and a redacted version by Wednesday, May 8.
Investors Brace for SEC Reply Brief in Ripple Brawl
According to a prior report by Crypto News Flash, Judge Analisa Torres ruled that Ripple’s XRP sales to institutional investors did require registration as securities. However, sales on public exchanges were deemed exempt. This split decision left the question of penalties unresolved even though the SEC filed for interlocutory appeal at the time.
The SEC seeks a hefty penalty of nearly $2 billion ($876,308,712 for disgorgement, a prejudgment interest of $198,150,940, and a $876,308,712 civil penalty). In addition to the financial penalty, the regulator also aims to prevent future XRP sales to institutional investors.
Ripple counters, arguing for a much smaller penalty of $10 million, citing the absence of fraud or manipulation accusations. The firm positions itself under the least severe tier of penalties within the Securities Act, with penalties accounting for general violations.
Additionally, Ripple cited the dismissal of charges against executives, Chris Larsen and Brad Garlinghouse for reckless disregard. Moreover, Ripple maintained its XRP sales complied with regulations by involving accredited investors or utilizing ODL contracts that eliminate profit and loss potential.
While a final ruling would be a welcome development for investors, the battle might not be over. The crypto community anticipates an appeal from the SEC regarding the July 2023 ruling that deemed programmatic XRP sales outside securities regulations (Howey Test).
Though the SEC’s interlocutory appeal motion was rejected in October 2023, an appeal after the final judgment remains a possibility. Moreover, Ripple’s CEO, Brad Garlinghouse noted that his firm is ready to take its legal battle with the SEC to the Supreme Court, as Crypto News Flash earlier indicated.
What Lies Ahead of XRP
This ongoing legal saga casts a shadow on XRP’s future. On Sunday, XRP traded below the 50-day and 200-day EMAs, sending bearish price signals. However, XRP has defiled expectations, increasing by 2.25% within the past 24 hours to trade at $0.5403. The trading volume also increased by a remarkable 13.6% to $747 million, while the market cap increased by 2% to $29.8 billion.
According to XRP’s recent trend, a break above the $0.5739 resistance level could give the bulls a run at the $0.60 handle. At the same time, XRP could decline to $0.50 if it drops below the top and bottom trend lines. The 14-day RSI reading of 48.16 predicts that XRP will drop below the $0.50 mark before entering oversold territory.
Overall, the coming days will be crucial for XRP as the SEC’s response and Judge Torres’ deliberation open the way for a potential resolution.