XRP News Today: Ongoing Ripple Lawsuit Puts SEC’s Regulatory Power to the Test

The Thursday Overview

On Thursday, XRP declined by 2.97%. Reversing a 0.22% gain from Wednesday, XRP ended the session at $0.6687.

SEC vs. Ripple: Court Dates Loom

There were no SEC v Ripple case-related updates for investors to consider on Thursday. However, court dates loom in the ongoing case. Defense attorney James Filan reminded the crypto community of the updated court briefing schedule on Thursday. According to the court briefing schedule,

• March 22, 2024 – SEC must file the opening remedy-related brief.
• April 22, 2024 – Ripple must submit the opposition brief.
• May 6, 2024 – SEC must file its reply brief.

The court could impose a less punitive penalty if Ripple did not continue violating Section 5 after the complaint. Ripple may reference several US cases that set precedents for a less punitive penalty.

US Case Law Favors a Lower Penalty

Ripple will likely highlight net proceeds (after expenses) of XRP sales to US institutional investors, excluding accredited investors. Several US court rulings could give Ripple sound argument to limit the size of a penalty.

• Morrison vs. National Bank Australia: The US Supreme Court ruled the SEC only has jurisdiction over sales to US institutional investors.

The ruling allows Ripple to deduct proceeds of XRP sales to non-US institutional investors from the $770 million in total sales to institutional investors.

• Liu vs. SEC: The disgorgement award cannot exceed the net profits.

Ripple will deduct all expenses associated with XRP sales to US institutional investors.

• SEC vs. Govil: The SEC may not demand a punitive disgorgement award without demonstrating investors suffered actual financial harm.

The ruling will enable Ripple to demonstrate the sales prices of XRP to US institutional investors and whether they suffered financial harm at the time of the complaint.

Other considerations include,

• Ripple could seek exemption from Section 5 of the 1933 Securities Act for XRP sales to accredited US investors.
• There was no fraudulent activity.
• The US lacked a regulatory framework for the US digital asset space.

Hints from the SEC Motion to Compel

The SEC opening brief will highlight whether Ripple continued to breach Section 5 after the complaint. Ripple could face a punitive disgorgement if XRP sales to US institutional investors continued after the complaint.

In February, the court granted an SEC Motion to Compel. Judge Sarah Netburn stated,

“The SEC credibly argues that the District Judge may consider post-complaint conduct when determining whether an injunction is necessary and just.”

Judge Netburn also articulated the court would consider the defendant’s wealth in determining the size of a penalty.

In January, the SEC filed a Motion to Compel, asking the court to order Ripple to provide,

• Financial statements for 2022/2023.
• Post-complaint contracts governing institutional sales.

While the focus remains on the final stages of the SEC vs. Ripple case, SEC plans to appeal against the Programmatic Sales of XRP ruling could extend the case into 2025.

Significantly, the SEC will unlikely consider XRP-spot ETF applications until after the appeals process.

Events Influencing SEC Plans to Appeal

Beyond the SEC v Ripple case, other events that could influence SEC plans to appeal are,

• The SEC v Coinbase case (COIN): Court ruling on the Coinbase Motion to Dismiss (MTD).
• An Office of Inspector General investigation into crypto conflicts of interest within the SEC.
• US Presidential Election: Republican front-runner Trump has softened his stance on crypto. A Trump victory could end SEC Chair Gary Gensler’s reign over the US crypto market.

XRP Price Action

Daily Chart

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

An XRP move to the $0.70 handle would give the bull a run at the $0.7467 resistance level.

OIG investigation-related news and SEC v crypto case-related updates need consideration.

However, a fall through the $0.6609 support level would bring the 50-day EMA and the trend line into play.

The 14-day RSI reading, 60.47, indicates an XRP move to the $0.7467 resistance level before entering overbought territory.

4-Hourly Chart

On the 4-hourly, XRP hovered above the 50-day and 200-day EMAs, confirming the bullish price trends.

An XRP break above the $0.70 handle would support a move to the $0.7467 resistance level.

However, a drop below the $0.6609 support level and the 50-day EMA would give the bears a run at the 200-day EMA.

The 4-hourly RSI, with a reading of 50.03, suggests an XRP return to the $0.7467 resistance level before entering overbought territory.