Crypto Exchanges Rush to Delist XRP Following SEC Charges
3 min readSeveral cryptocurrency exchanges have started delisting XRP. The actions follow charges brought about by the Securities and Exchange Commission (SEC) against Ripple for selling its token as an unregistered security.
XRP has plunged since the charges came to light. The former third-ranked cryptocurrency by market cap dropped from around $0.52 on Monday to around $0.33 at the time of writing.
Please note: In light of US Securities & Exchange Commission’s enforcement action against Ripple Labs & 2 of its executives, we have suspended all #XRP payment in and trading services on the OSL platform, effective immediately and until further notice.https://t.co/EXJJEHMawn
— OSL (@osldotcom) December 23, 2020
Cryptocurrency Exchanges Ditch XRP
As BeInCrypto reported earlier Wednesday, the SEC has officially charged Ripple executives with selling an unregistered security. The US watchdog alleges that the company and its executives sold more than $1.3 billion worth of the digital currency unlawfully.
According to an SEC press release, Ripple and CEO Brad Garlinghouse, and co-founder, Chris Larsen failed to register the ongoing sales. Meanwhile, the executives contend that XRP is a currency and not an investment contract.
If the SEC does deem XRP to be a security, the judgment will likely impact unregistered exchanges offering the cryptocurrency. Current regulations demand that all companies selling securities must register with the agency.
Accordingly, several US-based trading venues have started to remove XRP from their platforms. So far, OSL, Beaxy, and CrossTower all announced a sudden removal or suspension in XRP trading:
The SEC has charged @Ripple with conducting an unregistered security sale.
Due to this, #Beaxy has halted trading for XRP pending further news. $XRP withdrawals will remain enabled until further notice. pic.twitter.com/lVVqXJPdPP
— Beaxy Exchange (@BeaxyExchange) December 22, 2020
More exchanges and companies could also announce similar policies ahead of the lawsuit’s eventual outcome.
YouTuber and industry analyst Alex Saunders stated that exchanges and the financial services industry that Ripple’s business model revolves around ‘won’t dare to touch’ XRP until there is some clarity on its legal status.
Indeed, Bitwise Asset Management announced on Dec. 23 that it had liquidated its own position in XRP. According to a press release, the fund had a 3.8% allocation to XRP. It has reinvested the funds in other portfolio assets.
XRP Price Plunges on SEC News
If the SEC wins the pending lawsuit, the outcome won’t only impact the legality of Ripple and other companies selling XRP. It could also limit the digital asset’s supposed use case.
Understandably, the news has had a negative impact on the price. Ripple first announced that it expected an SEC lawsuit on Monday. At the time, XRP traded at around $0.52.
In the days following, the XRP price has dropped by around 36%. At the time of writing, the cryptocurrency trades around $0.33 per unit.
In terms of market cap, XRP plunged by around $9 billion over the same period. The drop meant it lost its position as the third-largest digital asset in terms of total market size.
A Threat to the Wider Industry?
As evidenced by Kik’s Kin token lawsuit, the SEC has been slowly going after companies it believes to have sold cryptocurrencies unlawfully. However, Ripple’s XRP is by far the largest target to date.
Such actions raise questions about other projects in the industry. While the SEC has previously stated that dominant coins Bitcoin (BTC) and Ether (ETH) are not securities, the same cannot be said for every project.
The 2017/18 initial coin offering boom saw many new projects raise money through token sales. A significant number of those selling tokens to US investors will likely satisfy the Howey Test, which the SEC uses to determine if an asset is a security.
The post Crypto Exchanges Rush to Delist XRP Following SEC Charges appeared first on BeInCrypto.
