Most tokens have been in the red this week, but one is surging. Ranked the 6th largest crypto asset by market cap, XRP has risen by more than 22% over the past seven days. It is currently priced at $0.52, according to data from CoinGecko. Moreover, this coin has seen gains of 53% since the start of the year.
But why is XRP performing well? The recent surge is driven by investor confidence that the developer of the crypto asset, Ripple, will defeat the US Securities and Commission Exchange (SEC)in an ongoing legal battle.
Ripple, which introduced a protocol that helps financial institutions transfer funds quickly and at a low cost, has been battling a lawsuit brought against by the SEC since 2020. The regulator alleges that the company sold unlicensed securities to raise over $1.3 billion.
Why Ripple May Defeat the SEC
Recently, Ripple’s attorneys included a ‘fair notice defense’ in a court filing, arguing that the company did not know the SEC would consider XRP a security.
Ripple paid the Justice Department over $600,000 in 2015 to settle a criminal investigation. This settlement also required Ripple to formally acknowledge that XRP was a digital currency, not a security.
For this reason, Senior counsel at Katten Muchin Roseman LLP, Gary DeWaal, says the 2015 settlement contradicts the SEC’s 2020 claims that the token is a security. He, therefore, thinks the court ruling could swing in Ripple’s favor.
SEC Enforcement Actions
If Ripple does win the case, it will go down in the history of crypto, considering that the SEC under the leadership of Gary Gensler, has been conducting a series of crackdowns on the crypto industry in recent months. The CEO has claimed severally that the agency considers all crypto assets securities except Bitcoin.
Since the start of the year, the SEC has hit a number of American crypto firms, like Genesis, Gemini, and Kraken, with huge fines for allegedly offering unregistered securities.
Earlier this week, Coinbase became the latest target as SEC issued a Wells Notice over the firm’s staking service.