XRP News: Fake News, the SEC v Ripple Case, and the Motion to Compel

Key Insights:

• XRP declined by 1.64% on Wednesday, ending the session at $0.5027.
• Fake news of compromised Ripple wallets sent XRP to sub-$0.50 before steadying.
• On Thursday, SEC chatter and SEC v Ripple court rulings need consideration.

The Wednesday Overview

On Wednesday, XRP declined by 1.64%. Following a 4.49% slide on Tuesday, XRP ended the session at $0.5027.

Ripple Co-Founder Chris Larsen Personal Wallet Compromised

On Wednesday, news hit the wires of a breach of Ripple co-founder Chris Larsen’s personal wallet. However, XRP became the victim of fake news, with reports of compromised company wallets impacting XRP.

XRP tumbled to a Wednesday session low of $0.4861 before retaking the $0.50 handle.

Larsen attempted to calm investor fears of hackers accessing company wallets. Responding to a post announcing Ripple was hacked for 213 million XRP, Larsen said,

“Yesterday, there was unauthorized access to a few of my personal XRP accounts (not Ripple) – we were quickly able to catch the problem and notify exchanges to freeze the affected addresses. Law enforcement is already involved.”

The Ripple co-founder went on to say,

“This is an isolated incident, and Ripple wallets are secure / were never compromised. We’ve confirmed nearly all the affected funds were converted out of XRP. We’re working with law enforcement and have been advised that a significant portion of funds have been frozen, and are pursuing the remainder aggressively.”

Ripple CEO Brad Garlinghouse made a statement about the fake news, adding,

“Given some irresponsible speculation and reporting, I want to reiterate that NO Ripple-managed wallets were compromised. Full stop.”

In November, fake news of BlackRock (BLK) filing for an XRP-spot ETF sent XRP to $0.7503 before returning below the $0.60 handle.

The latest FUD came as investors await a court ruling from the ongoing SEC v Ripple case.

SEC v Ripple: Motion to Compel Ruling

There were no SEC v Ripple case-related updates on Wednesday. However, investors await a court ruling on the SEC Motion to Compel. The SEC and Ripple are progressing through remedies-related discovery.

Discovery relates to the July 13, 2023, court ruling on XRP sales to institutional investors. Judge Analisa Torres ruled Ripple breached Section 5 of the 1933 Securities Act for failing to register XRP as a security for institutional sales.

Remedies-related discovery allows the SEC and Ripple to request information to support arguments for and against a punitive penalty.

The SEC Motion to Compel asked the Court to order Ripple to provide:

• 2022/23 financial statements.
• Post-complaint contracts governing XRP sales to institutional investors.

Crucially, Judge Torres may impose punitive penalties on Ripple if the SEC proves ongoing breaches of Section 5 of the 1933 Securities Act post the July 13, 2023, ruling.

Misrepresentations and an SEC Appeal

Ripple opposed the Motion to Compel and filed a Sur-Reply Letter arguing against the Motion to Compel. Notably, the Sur-Reply Letter highlighted that SEC lawyers made factual mischaracterizations. Judge Torres granted the Motion to file a Sur-Reply Letter on January 25, 2024.

This week, the SEC filed a Motion to Dismiss in the case against Debt Box. In December, the court ordered the SEC to show argue why its lawyers should not face sanctions for making false and misleading representations to the court.

The outcome of the case could influence buyer demand for XRP. However, SEC plans to appeal the Programmatic Sales ruling remain the focal point. On the July 13, 2023, Judge Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

Judge Torres rejected an SEC Motion for interlocutory appeal in October. Since the ruling, the SEC has expedited the SEC v Ripple case. The SEC can only appeal against the Programmatic Sales ruling at the end of the case.

XRP Price Action

Daily Chart

XRP remained below the 50-day and 200-day EMAs, affirming bearish price signals. On Wednesday, the 50-day EMA converged on the 200-day EMA. A bearish cross of the 50-day EMA through the 200-day EMA would confirm the bearish price trends.

An XRP break above the $0.5042 resistance level would support a move toward the $0.5470 resistance level.

SEC v Ripple case-related updates and SEC activity warrant investor attention.

However, a drop below the $0.50 handle would give the bears a run at the $0.4700 support level.

The 14-day RSI reading, 32.50, indicates an XRP fall below the $0.50 handle before entering oversold territory.

4-Hourly Chart

On the 4-hourly, XRP hovered below the 50-day and 200-day EMA. The EMAs confirmed the bearish price trends.

An XRP break above the $0.5042 resistance level would bring the 50-day EMA into play. A breakout from the 50-day EMA would give the bull a run at the $0.5470 resistance level.

However, a fall through the $0.50 handle would bring the $0.4700 support level into play.

The 4-hourly RSI, with a reading of 29.05, shows XRP in oversold territory. Buying pressure could intensify at $0.50.