- Ripple and the SEC continue their legal battle, now focused on the validity of certain materials and testimonies.
- The SEC highlights the legal question of whether Ripple’s institutional clients suffered damages, as some received a higher discount than others.
- XRP closed above $0.51 on Monday and continued climbing higher early on Tuesday.
Ripple (XRP) trades broadly sideways on Tuesday after closing above $0.51 on Monday as the payment firm’s legal battle against the US Securities and Exchange Commission (SEC) persists, now in the form of crossed motions to determine which materials and testimonies have to be included in the case.
The SEC filed on Monday its response to Ripple’s motion to strike new expert materials, which requested the court to dismiss testimony from SEC accountant Andrea Fox. The US regulator had shared new materials in its previous filings. Ripple labeled these materials as the testimony of the expert. The two parties are now arguing over the status of the SEC accountant Andrea Fox’s statements. Whether Fox’s statements will be considered as a summary or an expert testimony, the decision lies with the court.
The lawsuit’s focus has shifted from XRP sales made to institutional investors to the nature of one Andrea Fox’s comments. XRP holders have their eyes peeled for the next update, in May 2024, when the court rules on the lawsuit.
Daily digest market movers: SEC responds to Ripple motion in April 29 filing
- The SEC had requested Ripple’s financial statements and details about XRP institutional sales from both before and after the lawsuit. Upon receiving Ripple’s financial statements, the regulator brought in Assistant Chief Accountant at the SEC, Andrea Fox, to share a summary of the findings from the statements.
- Ripple’s lawyers considered Fox’s findings as “undisclosed expert testimony.” However, the SEC argues that it is a simple summary prepared from financial statements through the application of basic arithmetic.
- Ripple filed a motion to strike this testimony on April 23. The regulator stated that the claim is incorrect in Monday’s response. Attorney James Filan shares the filing in a tweet on X.
#XRPCommunity #SECGov v. #Ripple #XRP @Ripple has filed a Motion to Strike new expert materials the SEC submitted in support of its Motion for Remedies and Entry of Final Judgment.https://t.co/k8M84DxDiz
— James K. Filan (@FilanLaw) April 22, 2024
- The SEC filed its response to Ripple’s motion on Monday, April 29. In its filing, the regulator requested the court to deny Ripple’s motion and noted that the summary shared by the expert Andrea Fox’s statement is consistent with another SEC accountant summary witness declaration that has already been allowed by Judge Analisa Torres.
- The SEC stands by Fox’s declaration, says it is “proper summary evidence,” and states that the cross-border payment remittance firm has unsuccessfully raised the same argument before in the course of the lawsuit.
- Ripple did not question the correctness of Fox’s claim, while the SEC argues that Fox did not give an opinion on “pecuniary harm” or damages caused to institutional clients of Ripple’s ODL, supporting its stand on “summary.”
- The regulator states whether there was any pecuniary harm is a legal question. Attorney Filan shared the SEC's filing in his tweet on X.
#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed its opposition to @Ripple’s Motion to Strike new expert materials. pic.twitter.com/qwVyGJI8ZS
— James K. Filan (@FilanLaw) April 29, 2024See AlsoA new law will ban TikTok unless China sells most of it. An expert says it’s ‘unconstitutional’ and backed by no evidenceLaw Firm SEO: What It Is & How to Get StartedNiche Law Firm Digital Marketing Services — Law SEO ExpertsA Guide to Law Firm SEO Services
- Ripple had countered the SEC’s demand for over $2 billion in fines and damages in its recent filing. The firm said the fine should not exceed $10 million. Judge Sarah Netburn is expected to rule on the SEC and Ripple’s requests in May 2024.
Technical analysis: XRP sustains above $0.51
Ripple sustained above $0.51 as the SEC filed its response to the firm’s motion. The $0.53 level is the closest resistance for Ripple. While Ripple has broadly consolidated in the last few days, overcoming this level would be key to start an uptrend as it has acted as support throughout mid-February, March and early April.
The Relative Strength Index (RSI), a momentum indicator used to measure whether an asset is overbought or oversold, currently reads 41.43, up from the 39.65 observed on Sunday. The RSI, which is slowly climbing towards the neutral level at 50, is in agreement with price and no divergence is observed.
The Moving Average Convergence/Divergence (MACD) indicator shows green histogram bars above the neutral line and a recent crossover of the indicator above the signal line was noted on April 22, a bullish sign for XRP.
If XRP continues climbing higher, key resistances are at $0.53, $0.55 and $0.64, which align with the 50%, 61.8% and 100% Fibonacci retracement levels of the decline between April 9 top of $0.64 to April 13 low of $0.42.
XRP/USDT 1-day chart
A daily candlestick close below $0.50, a support level where XRP has hovered for the past four days, could invalidate the bullish thesis. In a correction, XRP could find support at the April 19 low of $0.46 and the April 13 low of $0.42.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14: 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 will need to keep litigating over the around $729 million it received under written contracts.
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 are likely to 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.
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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