Shortly after it became clear that the SEC would take action against Ripple, the first rumors arose that various crypto exchanges could cancel XRP. In fact, there were smaller exchanges that responded to the message in exactly the same way. Bitwise’s approach was one size bigger, because the index fund operated by the company sold off all XRP and it was canceled.
Now it looks even darker, because Bitstamp announced yesterday that it will suspend deposits and trading for US customers from January 8, 2021. These can then only hold or withdraw XRP on the exchange. The stock exchange is reacting to the regulatory uncertainty created by the lawsuit. Bitstamp was founded in 2011, making it one of the oldest exchanges. The trading volume for XRP was just over $ 160 million in the past 24 hours. The trading venue thus has a clear significance for XRP and the overall market.
If the SEC wins the lawsuit, the chances are actually not bad that XRP will end up being classified as a security and not as a cryptocurrency. The withdrawal of Bitstamp, Bitwise, Beaxy and various market makers is probably less out of caution than out of wise foresight.
Nobody can anticipate the outcome of the pending proceedings. However, the SEC has an impressive record that speaks for a successful approach. It often takes time before it even intervenes, but then it usually wins in court because the defendant cases are usually “watertight”.
Most recently, Telegram had to believe in it and had to call off a billion-dollar ICO, which was about to be completed. The SEC stepped in practically at the last second and filed a lawsuit to prevent the tokens from being distributed to investors.
After that, not only had to be reversed and fines paid. The plans to start a cryptocurrency based on the messenger service also had to be buried.
In a blog post , the company is very sure of its cause. Accordingly, the SEC is wrong and classifies XRP incorrectly. The relationship between Ripple as a company and XRP as a crypto currency has therefore also been completely misinterpreted.
You can be sure that a neutral court will understand the matter and decide in favor of Ripple. Furthermore, you not only see yourself on the right side of the law, but even pretend that the story will prove Ripple right in the end.
The lawsuit is also understood as an attack on the entire crypto industry and less on one’s own business model and the behavior of the founders and managers. Ripple might get into difficulties because the so-called Howey test provides that only one of a number of criteria must be met in order for it to be classified as a security. One could of course counter that the Howey test is completely out of date and does not do justice to a digital asset like XRP.
The key point, however, is that this is unlikely to be clarified in court, but rather the SEC pragmatically taps the aspects that matter. If the court sees the criteria met, then Ripple’s plans to move to Japan are likely to take on a firmer form.
Probably the most important question that remains unanswered is whether Coinbase will also say goodbye to XRP. The US company is planning an IPO, so it may need to do well with the SEC.
But even if there were no IPO in the near future, the stock exchange would certainly be in a difficult position due to its headquarters in the USA. It remains to be seen whether Coinbase will wait for the judgment or take action directly and cancel XRP in any form. Bitstamp’s approach could become a blueprint, although the exchange is based in Europe and is therefore subject to different starting conditions.