Legal Battles with SEC and Fed Rate Cut Bets Stir on XRP and Crypto Waters

• XRP rose by 1.19% amid mixed economic signals and SEC regulatory scrutiny.

• Ripple CEO Brad Garlinghouse is confident about launching an XRP ETF soon.

The legal battle between Ripple Labs and the United States Securities and Exchange Commission (SEC) is nearing its end, with significant implications for the cryptocurrency market. The court is poised to determine the final penalty for Ripple’s institutional sales of XRP, expected in the third quarter of 2024. This decision follows Judge Analisa Torres’s 2023 ruling that XRP is not inherently an investment contract, marking a significant milestone.

The most pressing issue in the ongoing Ripple vs. SEC case is the determination of the fine Ripple Labs will face for its institutional sales of XRP. Legal experts anticipate this decision, which will occur in the third quarter of 2024, concluding the remedies phase of the litigation. Ripple and the SEC also await a ruling on whether certain financial documents will be unsealed, which could significantly affect XRP’s market performance.

Since the lawsuit’s inception in December 2020, XRP’s price has been adversely affected, struggling to break past the $1 mark despite favorable rulings. The July 2023 decision by Judge Torres provided a temporary boost, but uncertainty continues to cloud investor confidence. 

Prospective XRP ETF and Market Catalysts

A key potential catalyst for XRP’s future price surge is the prospect of a spot XRP Exchange-Traded Fund (ETF) in the United States. Ripple CEO Brad Garlinghouse expressed confidence in the eventual launch of an XRP spot exchange-traded fund (ETF). Speaking with FOX Business, Garlinghouse highlighted the growing interest in crypto ETFs, noting that U.S. Bitcoin spot ETFs have quickly achieved multi-billion dollar valuations. This milestone took gold investments years to reach.

Garlinghouse emphasized the necessity of diversification through various crypto ETFs, including those for XRP, Solana, and Cardano. He noted that the SEC’s recent approvals for Ethereum ETFs suggest a shift in the regulator’s stance, likely influenced by previous court losses. Despite potential resistance from the SEC, Garlinghouse argued that an XRP ETF is inevitable, given XRP’s historical market position and investor demand for diversification options.

SEC Faces Legal Setbacks and Operational Changes

The SEC announced on June 4 that it would close its Salt Lake Regional Office in 2024, citing significant attrition and budget considerations. This decision follows the SEC’s recent legal troubles, notably in the Debt Box case, where a federal judge ordered the SEC to justify its actions and pay legal fees for the opposing party. Coinbase’s Chief Legal Officer, Paul Grewal, linked the closure to these judicial challenges, suggesting unprecedented misrepresentations and bad faith by the SEC.

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“Attrition”— is that what we are calling unprecedented misrepresentations and bad faith warranting unprecedented sanctions by a federal judge? https://t.co/rb581Eb0lD

— paulgrewal.eth (@iampaulgrewal) June 4, 2024

Simultaneously, the market is keenly watching the outcome of the Coinbase Motion for Interlocutory Appeal. Should Judge Katherine Failla approve the motion, the courts will reassess their decision to largely deny Coinbase’s Motion to Dismiss. Coinbase argues that the SEC lacks statutory authority to regulate US crypto exchanges. A favorable ruling for Coinbase could impact the SEC’s strategy, particularly regarding its potential appeal against the Programmatic Sales of XRP ruling.

Currently, XRP is trading at $0.562, showing minimal movement within a narrow range. Additionally, XRP has gained 1.19% in the last 24 hours.