XRP News: SEC v Ripple Enters Year Three – What’s Next?

Key Insights:

• XRP gained 0.14% on Friday, ending the session at $0.6253.
• Amicus Curiae attorney John E. Deaton looks back to the December 2020 SEC move against Ripple.
• On Saturday, SEC activity, SEC v Crypto case-related news, and BTC-spot ETF-related updates are the focal points.

The Friday Overview

On Friday, XRP gained 0.14%. Following a 1.28% rise on Thursday, XRP ended the day at $0.6253. Significantly, XRP extended its winning streak to three sessions.

SEC v Ripple Case Entering a New Year of Litigation

There were no SEC v Ripple case-related updates for investors to consider on Friday. Behind the scenes, the SEC and Ripple are progressing through remedies-related discovery. The discovery process relates to the illegal sale of XRP to US institutional investors and must conclude by February 12, 2024.

Ripple and the SEC have remained silent since the discovery began in November. Barring an SEC settlement, the markets must wait until March for court filings. Per the Court scheduling order, the SEC and Ripple must file their remedy briefs by March 13, 2024, and April 19, 2024, respectively. The SEC must file any reply brief by April 19, 2024.

The briefs will influence the penalty Ripple must pay for XRP sales to institutional investors. While the SEC will want a hefty penalty, US case law could significantly impact the amount Ripple pays. Legal experts highlighted three US cases in November, which Ripple could cite in the April brief.

Morrison v NAB: The US Supreme Court ruled the SEC only has jurisdiction over US-based sales. Ripple will likely demonstrate total XRP sales to US institutional investors.

Liu v SEC: The court ruled a disgorgement award must not exceed the net profits and must go to the victims. In discovery, Ripple will lay out its expenses relating to XRP sales to US institutional investors to derive net profits.

SEC v Govil: The Court ruled that the SEC cannot ask for a punitive disgorgement award without demonstrating investors suffered financial harm. The SEC will attempt to demonstrate financial harm to US investors.

Notably, the SEC filed the case against Ripple in December 2020.

Amicus Curiae Attorney John E. Deaton Talks About the 2020 SEC Suit

On Friday, Amicus Curiae attorney John E. Deaton looked back at the SEC filing, saying,

“Three years ago yesterday, Jay Clayton met with Gary Gensler. The next day – TODAY – Clayton filed the SEC vs. Ripple case, alleging ALL XRP tokens constitute illegal securities. Clayton filed the most significant non-fraud SEC enforcement action in modern history (since 1946) and then walked out the SEC’s door forever. If you don’t think the XRP case was the topic of discussion the night before, between Clayton and Gensler, you’re incredibly naïve.”

Since the 2020 filing, Judge Torres delivered the Programmatic Sales ruling. The SEC also dropped the charges against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.

Recent rulings and case-related activity have been in favor of Ripple and XRP. However, the SEC will likely appeal against the Programmatic Sales ruling. Uncertainty toward the outcome of an appeal leaves XRP at sub-$0.70.

Earlier this month, Ripple Chief Legal Officer Stuart Alderoty gave three predictions for 2024. One could end the SEC’s reign of regulation by enforcement. The Ripple CLO predicted,

“Judges will continue to be the last line of defense against the SEC’s overreach, and the SEC will continue to lose major issues in the courts – setting the table for a showdown in the Supreme Court.”

A Supreme Court ruling that XRP is not a security could deliver regulatory clarity to the US crypto market.

XRP Price Action

Daily Chart

XRP remained above the 50-day and 200-day EMAs, affirming bullish price signals.

An XRP move through the $0.6354 resistance level would bring the $0.7047 resistance level into play.

SEC activity, SEC vs. crypto case-related news, and BTC-spot ETF-related updates are the focal points for Saturday, December 23, 2023.

However, a break below the 50-day EMA would give the bears a run at the $0.5835 support level.

The 14-day RSI reading, 47.86, indicates an XRP drop below the $0.60 handle before entering oversold territory.

4-Hourly Chart

On the 4-hourly, XRP sat below the 50-day and 200-day EMAs, sending bearish near-term price signals.

An XRP break above the EMAs would support a move to the $0.6354 resistance level.

However, an XRP drop below the $0.60 handle would bring the $0.5835 support level into play.

The 4-hourly RSI, with a reading of 49.39, indicates an XRP fall through the $0.60 handle before entering oversold territory.