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October 2, 2022
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SEC on the hunt for Ripple: Is XRP a security or a currency?

Trader and options specialist Andrew Keene offers advice on the problematic situation involving Ripple, XRP and SEC

Remember the story with the two blindfolded guys standing around an elephant? One has his hand on the elephant’s leg and swears it is a tree, but the other has his hand on the elephant’s trunk and insists that he has a snake in his hands. They couldn’t disagree any more. Now, this is an oversimplification, but it’s basically the result of the huge controversy surrounding Ripple’s XRP now – a dispute that is getting hotter and more urgent now that the holidays are over. Ripple insists that XRP is a cryptocurrency, but the United States Securities and Exchange Commission (SEC) does not see it that way.

Market regulators say XRP is a security – stocks – just like Microsoft Corp. or Walmart Inc .. The SEC claims that XRP is an unregistered security and that executives have benefited from the sum of $ 1.3 billion.

And now XRP owners, who have filed their own petition in the case, are concerned that cryptocurrency platforms around the world, including major U.S. companies like Coinbase, are suspending or removing XRP from their platforms. Others said they plan to withdraw the XRP by the end of the month. This is really bad news if you are an XRP holder.

I mean, in the markets, what’s the use of something you can’t buy or sell?

The Ripple token had a good run in November and December, but news about the SEC process and moves to eliminate it from exchanges caused XRP to plummet by more than 70%, to the $ 0.20 range.

It’s like a he-said-she-said scenario with billions at stake and it could take years for an outcome. It would be useless to speculate about the result.

Speaking of speculation, people who still have the ability or access to trade XRP (and an unfathomable risk appetite) helped push it to $ 0.25 yesterday, the first trading day of the new year.

To be clear, I really don’t expect XRP’s earnings to continue. Even if you are speculating, it is an extremely risky position. In fact, I think the XRP will be under more and more pressure as more and more exchanges pull the rope.

Honestly, I’m surprised that Ripple took so long to hit a wall. What is really cool about encryption is its total lack of centralization. Ripple never fits that profile perfectly; it was always very centralized and somewhere around 100 major banks were using it in 2018. Its blockchain apps – the other really cool thing about cryptography – were hardly used there. I must say that I understand where the SEC is coming from in this case.

Source: MoneyMorning

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