Legal Expert Explains Why Ripple’s XRP Price Remains Low Amidst SEC Lawsuit
In a recent legal commentary, attorney Fred Rispoli has delved into the reasons behind the low price of XRP amidst the ongoing lawsuit between Ripple and the U.S. Securities and Exchange Commission (SEC). The SEC has filed a motion seeking a remedies package from Ripple, including a $2 billion fine, for its alleged breach of securities laws related to XRP sales to institutional investors.
Rispoli suggests that the discounted sales of XRP to institutional buyers by Ripple could be a significant factor behind the cryptocurrency’s low price. He highlights the SEC’s claim that Ripple showed favoritism in these sales, allowing certain institutions to procure XRP at much lower prices, while others purchased the token at higher prices. The lack of transparency regarding these discounted sales has raised concerns about Ripple’s actions and potential harm to investors.
The legal expert questions whether these institutions, who obtained XRP at significantly discounted prices, may be responsible for large sell-offs, negatively impacting XRP’s price whenever a bullish trend attempts to form. Rispoli expresses hope that the situation is not as dire as it appears, but acknowledges that Ripple’s discounted sales could contribute to the persistent low price of XRP.
Furthermore, Rispoli suggests that if these institutions are looking to take profits during any future XRP rally, it could compound selling pressure. He argues that retail investors who continue to hold XRP, hoping for a substantial price increase, may unknowingly be serving as exit liquidity for these institutional investors.
While Ripple is expected to file a brief reply to the SEC’s motion next month, the details revealed from the SEC’s motion indicate that Ripple continued its XRP sales even after the agency filed its complaint and summary judgment. However, Ripple has argued that its post-lawsuit sales, particularly those related to On-Demand Liquidity (ODL), had a different nature compared to sales made to institutions before the lawsuit. Rispoli emphasizes that Ripple would need to sufficiently prove this distinction.
In conclusion, the impact of Ripple’s discounted sales to institutional buyers on the low price of XRP is a topic of concern and speculation. As the lawsuit unfolds, further clarity and evidence from both parties will be needed to understand the full extent of Ripple’s actions and their effect on XRP’s price.