Ripple has one of the most exciting journeys within the cryptocurrency space. And like many digital asset projects, it is no stranger to controversy.
With its history dating back to 2004, the global payment-focused blockchain project has gone through multiple rebrandings, a major quarrel between previous and current management, and struck an astonishing number of partnerships with key financial firms. Most importantly, Ripple achieved excellent progress on its road to rival traditional payment networks like SWIFT.
Of course, we shouldn’t forget about Ripple’s ongoing lawsuit with the US Securities and Exchange Commission (SEC), its most high-profile case to date. However, while many speculated the project’s downfall due to the intensive regulatory pressure, it remained resilient as a reliable service provider and managed to further expand its ecosystem.
What’s more, while the native XRP’s price has increased significantly since the SEC case, the valuation of Ripple Labs, the company behind the project, has also continued its growth.
In this article, we will revisit Ripple’s latest developments since our latest piece about the project and how its lawsuit with the SEC goes, along with analyzing XRP’s price dynamics.
Let’s get started!
The State of the Infamous SEC vs. Ripple Lawsuit
First, let’s start with the infamous lawsuit between the SEC and Ripple Labs.
In December 2020, the federal agency filed a complaint against the crypto company, charging the project as well as former CEO Christian Larsen and current CEO Brad Garlinghouse for selling $1.3 billion XRP via an unregistered digital asset securities offering.
Regulatory lawsuits against crypto firms are not uncommon in the US, with projects like BlockFi, Bitfinex, Tether, Binance, Tron, and BitMEX featuring a history of being the defendants in legal cases with the United States authorities.
What’s so special about this case is that, while the majority of the lawsuits against blockchain companies end in settlements without any trial, Ripple instead chose to settle the matter in a high-profile court battle.
By doing so, the result of the case will have a great influence on future digital asset regulation in the United States. If the agency comes out as the winner, it will boost the agency’s efforts to regulate the crypto market via its existing securities laws. On the other hand, if Ripple is victorious, it will hinder the SEC’s ongoing regulatory efforts, and instead, it will potentially pave the way for a new, more comprehensive legal framework around cryptocurrency.
Based on all this information, it has become clear that the stakes are very high. And, it seems that Ripple has been playing its cards right, effectively challenging the SEC’s might in the case.
In our latest article about the project, we have explained how a March 2021 court order granting the right for XRP holders to file a motion to intervene in the case could have changed the narrative to favor Ripple.
However, it wasn’t the only major battle the project won against the SEC in the case. In May, the court ruled to deny a motion by the agency, which would provide insight into Ripple Labs’ memos discussing XRP sales with its lawyers. A little earlier, while the blockchain firm was granted access to an internal SEC discussion about cryptocurrencies, the regulator was barred from disclosing Garlinghouse’s and Larsen’s financial records.
Moreover, in July, Ripple was granted the ability to ask William Hinman, the former director of SEC’s Division of Corporate Finance who said in 2018 that ETH is not a security, to testify about the reason why he thinks the securities law should apply to XRP but not to Ethereum’s native cryptocurrency. Later on, Garlinghouse even accused the regulator of giving an unfair advantage to ETH, which he believes could have helped the digital asset claim the second rank by market cap from XRP.
Besides getting access in August to Binance’s records to prove that Garlinghouse acted outside the SEC’s jurisdictions regarding XRP sales, one of the most important progress in Ripple’s battle against the regulator was made only recently.
With a February 17, 2022 deadline, the court ordered Ripple Labs to unseal documents from 2012, which are mainly legal memos from lawyers advising the blockchain company about the launch of XRP.
The information obtained from these papers is crucial, as the main pillar of Ripple’s defense is that the project didn’t know that its cryptocurrency could be categorized as a security. If that argument is true, then it serves as proof for the SEC’s failure to notify the crypto company about its intentions (called fair notice) before resolving the issue in court.
After unsealing the documents a few days ago, observers of the case argued that the information revealed favors Ripple, with some even stating that they serve as proof that XRP is not a security. What’s more, former SEC official Joseph Hall recently expressed his opinion about the lawsuit, expecting the agency to “lose on the merits” of the case against the blockchain company.
Overall, it’s safe to conclude that, while the case is not closed yet, Ripple remains in a very strong position against the SEC.
Financial Partnerships and CBDC Collaboration
Collaborating with over 300 institutional players in the payments industry, Ripple is among the crypto projects that struck the most partnerships to date. What’s more, Ripple has managed to secure many partnerships with companies outside of the digital asset space.
However, it seems the SEC lawsuit hasn’t managed to halt the team’s efforts in this field. Below, we have collected the most important Ripple deals since our last update:
- SBI Remit: In July 2021, Ripple announced a new partnership with SBI Remit, Japan’s largest money transfer provider, as well as mobile payments service Coins.ph and crypto exchange SBI VC Trade to enhance remittance payments from Japan to the Philippines via the company’s On-Demand Liquidity solution.
- Royal Monetary Authority of Bhutan: Since March 2021, Ripple has been piloting its CBDC solution. As the private version of the public XRP Ledger (XRPL), this new service is designed to serve central banks that are looking to launch the digital versions of their fiat currencies. In September, Ripple Labs partnered with the Royal Monetary Authority of Bhutan that will use the project’s solution to pilot its state-issued digital currency.
- Nelnet Renewable Energy: A month later after the RMA partnership, Ripple announced a $44 million clean energy fund in collaboration with Nelnet Renewable Energy, the sustainable branch of the US-based financial services and technology company.
- Republic of Palau: In November, Ripple formed a partnership with the Republic of Palau. The island country and the blockchain company will explore potential use-cases of the XRPL for cross-border payments and a government- and USD-backed national stablecoin.
Ecosystem Development: Liquidity Hub, wXRP, and NFT Creator Fund
In addition to partnerships, Ripple has been busy developing its ecosystem in the last few months. After launching its CBDC solution’s pilot, the project introduced its Liquidity Hub service in November.
Targeting enterprises, Liquidity Hub offers Ripple’s finance firm partners an easy and efficient way to source digital assets from industry providers like exchanges, market makers, and over-the-counter (OTC) desks. With initial support for six cryptocurrencies (BTC, ETH, XRP, LTC, ETC, BCH), the solution is expected to launch later in 2022 and expand its offerings with more coins and NFTs in the future.
In December 2021, Wrapped XRP (wXRP) officially launched on the Ethereum blockchain via a collaborative effort between wrapped.com and Hex Trust. Backed 1:1 by XRP, this wrapped token paves the way for using Ripple’s native token throughout Ethereum’s DeFi, NFT, and dApps ecosystem.
It’s also important to mention Ripple’s $250 million Creator Fund. Launched in September, the project seeks to use the money to support creators, marketplaces, and brands in accelerating crypto adoption and exploring new use cases for NFTs on the XRPL.
XRP Price Surges Along With Ripple Labs’ Valuation
Soon after the SEC announced its lawsuit against Ripple in December 2020, many in the crypto community have expected XRP to take a major hit that would potentially lead to the project’s downfall.
The cryptocurrency indeed lost over 60% of its value a few days after the incident, especially when multiple exchanges decided to delist the coin from their platforms due to the increasing regulatory pressure. However, this was only a short-term trend, as XRP managed to fully recover in less than two months.
What’s more, Ripple’s native coin surged to new highs in the coming months, reaching $1.84 on April 14. Despite the market taking some hits and the ongoing lawsuit Ripple faces, XRP achieved a 250% ROI throughout 2021.
Even if we considered its pre-lawsuit price of $0.584 on December 18, 2020, XRP’s value has grown 31% as of March 1, 2022.
Interestingly, it wasn’t only XRP that surged in the past few months. In January 2022, Ripple Labs’ valuation grew to the record of $15 billion after it repurchased the shares it sold to investors through a $200 million Series C round in December 2019.
Due to Ripple Labs’ recent actions, its valuation is up 53% from the previous $9.8 billion in December 2019.
Despite SEC Trouble, Ripple Becomes More Resilient Than Ever
Despite the initial doomsday scenarios, Ripple has remained resilient since the start of the SEC’s lawsuit. By winning multiple battles against the US regulator, the project managed to turn the tide, with analysts expecting it to win the case.
Since market players remained bullish on both the project and its native digital asset, Ripple’s valuation reached a new all-time high recently while XRP provided investors with decent gains since the start of the SEC case.
At the same time, as Ripple has been expanding its ecosystem, it has struck great deals with organizations, especially in the field of CBDC development as well as sustainability-related initiatives.
In the coming months, the project’s lawsuit with the SEC will remain a crucial event to follow for digital asset players, as it will likely have a significant influence on the future crypto regulation of the United States.