XRP News: Terraform Labs Ruling Resonates as Focus Turns to SEC v Coinbase

Key Insights:

• XRP declined by 1.92% on Friday, ending the session at $0.6230.
• Ruling in SEC vs. Terraform Labs/Do Kwon leaves XRP and the broader market in negative territory.
• SEC activity and case-related news remain focal points on Saturday.

The Friday Overview

On Friday, XRP declined by 1.92%. Reversing a 0.08% gain on Thursday, XRP ended the day at $0.6230.

Ripple CLO Stuart Alderoty Discusses Terraform Labs Ruling

On Thursday, the presiding Judge in the SEC v Terraform Labs and Do Kwon case ruled that TerraUSD and Luna are securities. The charges for failing to register Luna and TerraUSD stand, and the trial will begin on January 29, 2024.

Judge Rakoff grabbed the headlines in August, commenting on the Programmatic Sales ruling. In July, Judge Analisa Torres ruled XRP was not a security in Programmatic Sales. Judge Torres is the presiding Judge in the SEC v Ripple case.

Ripple Chief Legal Officer Stuart Alderoty shared his views about the Terraform Labs ruling, saying,

“I have no firm view on the merits of the Terraform case, but here are a couple of thoughts on yesterday’s ruling. 1. Facts matter. 2. Judge Rakoff does not criticize, let alone even cite, Judge Torres’ Ripple ruling; 3. The SEC’s “forever” crypto ground war, fighting token by token in lengthy litigation, is a fool’s errand driven by a quest for political power over sound policy.”

The ruling makes the SEC v Coinbase case more significant. A Coinbase (COIN) victory against the SEC could address the classification of crypto and the SEC’s reach over the US digital asset space.

On January 17, 2024, Judge Katherine Failla will hear oral arguments on the Coinbase motion to dismiss (MTD). Coinbase filed a motion to dismiss (MTD) in August, arguing the SEC has no statutory authority to regulate crypto exchanges.

While unlikely, Judge Failla can rule on the Coinbase MTD before the start of the Terraform Labs trial. If Judge Failla grants the Coinbase MTD, the Coinbase victory would pour cold water on fallout from the SEC v Terraform Labs case.

Terraform Labs and Ripple Rulings: The Key Takeaways

Amicus Curiae attorney John E. Deaton shared a post on X (formerly Twitter) from Crypto and Finreg lawyer Mike Selig. Formerly with the CFTC, Selig shared his views on the Judge Rakoff ruling, comparisons to the Programmatic Sales ruling, and possible implications for the crypto market. Some key takeaways include,

• Judge Rakoff did not rule that cryptos are securities when sold by third parties in secondary transactions.
• UST sales combined with Anchor were securities. Terraform Labs advertised the yield income available when purchasing UST via Anchor.
• Ruling on sales to institutional investors aligned with the Ripple ruling on XRP sales to institutional investors..

The sale of tokens to institutional investors could eventually be the piece of the pie that falls into the SEC’s lap. However, this could depend on the result of the US Presidential Election. Two crypto Bills are in Congress, with significantly different intentions.

The Responsible Financial Innovation Act aims to drive innovation, while protecting investors. Significantly, the Bill would give the CFTC greater authority and would likely progress if the Republicans win the House and the Senate. Senator Cynthia Lummis and Kirsten Gillibrand proposed the Bill in 2022.

The Digital Asset Anti-Money Laundering Bill could adversely impact the crypto space. Senator Elizabeth Warren, Senator Roger Marshall, and the American Bankers Association drafted the Bill. The Bill would force bank-style regulations onto the US crypto space. A Democratic Party clean sweep could support the Bill.

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 $0.65 handle into play.

SEC activity and case-related chatter are focal points.

However, a break below the 50-day EMA would support a fall toward the $0.5835 support level.

The 14-day RSI reading, 49.70, 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 EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

An XRP break above the 50-day EMA and the $0.6354 resistance level would bring the $0.65 handle into play.

However, a fall through the 200-day EMA would give the bears a run at the $0.5835 support level.

The 4-hourly RSI, with a reading of 46.76, indicates an XRP fall to the $0.5835 support level before entering oversold territory.