With the fifth-largest cryptocurrency, XRP, falling by 16% to below $0.70, the price trend has paused. According to statistics from CoinGecko, the cryptocurrency is once again trading below BNB on Binance.
This price decline occurs after a price increase of more than 80% following a split decision in the Ripple v. SEC case, which resulted in the relisting of XRP on Coinbase, Bitstamp, and other well-known exchanges in the United States.
Fox Business’ Charles Gasparino tweeted about the decline and cited unresolved questions over the full scope of Ripple’s legal triumph.
The pro-Ripple movement has mostly overlooked the fact that the court ruled that $700 million in XRP sales were unlawful and required repayment.
“Quasi-securities”
The court’s ruling has been studied extensively by legal scholar John Reed Stark, who has identified many possible weaknesses. According to Stark, the decision complicates the line between programmatic sales of the tokens on cryptocurrency trading platforms and private sales of XRP to approved investors.
According to him, this strategy might create a class of “quasi-securities” that vary according on the level of investor intelligence, which he describes as “counter-intuitive, inconsistent with SEC case law, and unprecedented in this context.”
Stark also draws attention to the worry that the decision would consider token sales to sophisticated investors, such venture capital companies, as securities, but not sales to regular traders. He asserts that this is against fundamental investor protection principles and ignores the reality that, regardless of their level of knowledge, all investors are placing a wager on Ripple when purchasing XRP.
Not over yet?
The former SEC official ends by predicting that the District Court’s decisions concerning programmatic and other sales would be reversed and that the SEC will probably appeal the Ripple judgement to the 2nd Circuit.
Without adequate disclosure and investor education, he cautions, the market may witness a new generation of tokens that are free from securities law.
