XRP fails to recover even as Ripple files appeal in response to SEC's move
- Ripple announced on Thursday the filing of Form C, a pre-argument statement outlining the issues the firm will address in the appeals process.
- Ripple's move comes after the SEC appealed the 2024 final ruling in the lawsuit that imposed a $125 million penalty on the firm.
- XRP price loses over 1.5% on the day, showing that lawsuit-related developments failed to catalyze gains for the crypto token.
Ripple (XRP) price has been range bound between $0.5666 and $0.5068 since October 3. Over the past 20 days, XRP has traded within the range even as the Securities & Exchange Commission (SEC) vs. Ripple lawsuit sees new developments.
At the time of writing on Friday, XRP price loses over 1.5% on the day, trading at $0.5230, and could fall nearly 9% if the altcoin corrects further.
Ripple makes important filing, responds to SEC appeal
Ripple filed Form C, a Civil Appeal Pre-Argument Statement that outlines the issues that the payment remittance firm is set to address in the appeal. On Thursday, Ripple’s Chief Legal Officer (CLO) Stuart Alderoty informed that the firm had filed the document in a timely manner and assuaged trader concerns about XRP’s legal clarity.
Today, Ripple filed a Form C - listing the issues we plan to raise on our cross appeal. A few things to keep in mind as we move forward:
— Stuart Alderoty (@s_alderoty) October 25, 2024
The case is not about whether XRP, in and of itself, is a security. XRP is uniquely situated as having clarity (alongside BTC) in not being… https://t.co/AmFocAnbPx
XRP gained clarity as a non-security in transactions on cryptocurrency exchange platforms. The July 2023 ruling stands undisputed, and Alderoty confirms that the SEC has not included the issue in its legal arguments.
The final ruling in the Ripple lawsuit, which identified XRP as a security in institutional sales made to firms, was labeled a violation of Federal Securities Laws and is up for argument. Ripple had requested a postponement of the $125 million financial settlement imposed by the SEC, which is expected to be addressed in the SEC’s arguments as well.
In its Form C, Ripple picks four key issues:
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Challenges the definition of “investment contract” under the Securities Act
The payment remittance firm contends that an investment contract “must have the essential ingredients of (a) a contract, (b) that imposes post-sale obligations on the seller, and (c) that gives the buyer a right to demand and receive profits from the seller’s activities.” This is likely related to the $125 million fine imposed on the firm for its XRP token sales to institutions.
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Ripple disputes the court’s application of the Howey Test
The application of the Howey Test resulted in XRP being identified as an investment contract or security in institutional sales and not as security on exchange platforms. However, Ripple disputes the application and argues that the court erred in concluding that some of its XRP transfers met the criteria for an investment contract.
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Fair notice defense is back in action, post the lawsuit
Ripple argues that the firm lacked notice for the alleged violation of securities laws, cites evidence of widespread uncertainty about the application of federal securities laws to virtual currencies and other digital assets. This highlights the SEC’s inconsistent and vague statements that added to the firm’s confusion and a lack of a “fair notice.”
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Ripple challenges the injunction issued against it
The cross-border payment remittance firm contends that the injunction fails to meet the clarity requirements of Rule 65 of the Federal Rules of Civil Procedure, as it merely directs the company to “obey the law” without providing detailed guidance. The injunction, according to Ripple, leaves room for interpretation and could potentially hinder its business operations.
XRP price has been range-bound, further losses are likely
Ripple has been trading in a tight range since early October. However, the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) technical indicators in the daily chart support a bearish thesis for XRP.
MACD is about to create a bearish crossover on Friday, with red histogram bars under the neutral line, indicating a bearish underlying momentum in the XRP price trend. Additionally, the RSI points downwards and reads 39, under the neutral level at 50, showing rising bearish momentum.
XRP could extend losses by 8.60% and sweep liquidity at the lower boundary of the Fair Value Gap (FVG) at $0.4780. On its way down, the altcoin could find interim support at $0.5068, the October 3 low.
XRP/USDT daily chart
However, a daily candlestick close above the 200-day Exponential Moving Average at $0.5519 could invalidate the bearish thesis. Further up, XRP could test resistance at the October 17 high of $0.5666.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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