XRP News Today: Investor Confidence Grows as SEC Faces Court Criticism

XRP tracked the broader crypto market into positive territory on Thursday, June 27. However, XRP trailed the crypto market. The pending verdict from the SEC vs. Ripple case and SEC plans to appeal against the Programmatic Sales of XRP ruling remained XRP headwinds.

XRP Rises as Investors Consider the Pending Court Verdict

On Thursday, June 27, XRP gained 1.21%. Reversing a 1.20% loss from Wednesday, June 26, XRP closed the session at $0.4754.

There were no SEC v Ripple case-related updates for investors to consider on Thursday. Investors awaited the court ruling on the penalty for breaking US securities laws for XRP sales to institutional investors.

In March, the SEC filed its remedies-related opening brief with the courts, asking for an almost $2 billion penalty. Furthermore, the SEC asked the courts for an injunction prohibiting XRP sales to institutional investors.

In its remedies-related reply brief, Ripple argued that it did not continue to breach US securities laws, proposing a penalty of $10 million. Ripple also highlighted the lack of allegations of fraud in the case.

The outcome may hinge on the court interpretation of post-complaint activity.

Ripple may avoid an injunction and could pay a penalty of $10 million if the court agrees that,

• Post-complaint XRP sales were to accredited institutional investors, exempt from US securities laws.
• XRP sales via ODL contracts do not qualify as an investment contract under the Howey Test because the contracts prevent profit or loss.

Investors may be betting that the US courts cannot rule that ODL contracts breached US securities laws. The US Supreme Court, through the Howey test, provided four criteria for establishing if an asset is an investment contract and, therefore, a security. Ripple must show that it fails to meet one of the four prongs.

One prong is the expectation of profit. Investors expect financial gains from an investment stemming from company performance. Ripple argued that the ODL contracts explicitly prevent profits, suggesting post-complaint compliance with US securities laws.

As investors awaited the heavily anticipated court ruling, the SEC faced more backlash from the US courts.

Will the Latest Court Ruling Influence SEC Appeal Plans?

On Thursday, June 27, Ripple Chief Legal Officer Stuart Alderoty shared the latest court ruling that targeted the SEC, saying,

“Another court slams the SEC. This time for unlawfully rescinding a rule on proxy advisory firms without adhering to the Administrative Procedure Act. The court explains that Gensler personally directed this illegal move.”

While the case did not involve a crypto firm, it highlighted current court sentiment toward the SEC.

Alderoty shared the court order that discussed the consideration of a 2020 Rule and direction from newly appointed SEC Chair Gary Gensler to reconsider the Rule.

Things could get worse for SEC Chair Gary Gensler. The Office of Inspector General (IG) is nearing a conclusion to its investigation of alleged crypto conflicts of interest within the SEC.

Investigation into the SEC Involves Former Director William Hinman

In February, US Government Watchdog Empower Oversight announced the status of the IG investigation. The allegations of conflicts of interest related to former SEC Director William Hinman. Hinman was a central figure in the SEC vs. Ripple case.

Empower Oversight sued the SEC in 2021, alleging that former SEC officials acted biasedly against XRP and Ripple. Empower Oversight claimed that William Hinman received millions of dollars from his former employer, Simpson Thacher, part of a group promoting Enterprise Ethereum.

Hinman publicly announced that bitcoin (BTC) and ethereum (ETH) were not securities in 2018. Hinman returned to Simpson Thacher after leaving the SEC.

Significantly, the US courts ordered the SEC to disclose internal communications involving Hinman to Ripple in 2023. The internal documents revealed that Hinman continued to meet with Simpson Thacher despite warnings from the SEC Ethics Division.

An adverse outcome to the IG investigation could force the SEC to end plans to appeal against the Programmatic Sales of XRP ruling. Investors would likely embrace such an outcome, with XRP likely to retake the $1.00 handle.

XRP Price Action

Daily Chart

XRP sat well below the 50-day and 200-day EMAs, sending bearish price signals.

An XRP break above the trend lines would support a move to the 50-day EMA. A breakout from the 50-day EMA could give the bulls a run at the 200-day EMA and the $0.55 handle.

SEC vs. crypto case-related news and US economic indicators require investor attention.

Conversely, an XRP break below the $0.4650 handle could give the bears a run at the $0.45 handle.

With a 14-day RSI reading of 39.91, XRP may drop to the $0.45 level before entering oversold territory.