What Traders Need to Know About XRP Coin’s Recent Troubles | What Traders Need to Know About XRP Coin's Recent Troubles Financial Buzz

What Traders Need to Know About XRP Coin’s Recent Troubles

Have you been wondering what happened to XRP (Ripple coin) after the last U.S. administration filed a major lawsuit against the company in late 2020? The whole situation was very odd and unprecedented. The SEC rarely takes action like that when there’s about to be a change in political parties. In any case, the whole fiasco had an immediate effect on the price of XRP. It’s important to understand that the lawsuit was filed against the company, not against the virtual money it created, XRP.

Even so, many of the crypto exchanges de-listed it and temporarily suspending trading. Because the company is U.S.-based, one effect has been widespread off-exchange Ripple trading by individual investors. What does it all mean? It’s possible to make some sense out of the confusion by examining recent price action, looking at what the SEC said, and analyzing what the new U.S. political administration might do about that pending lawsuit.

Recent Price Action for XRP

COVID hit Ripple pretty hard, as it did all the other virtual coins. From a February value of $0.30 to a mid-March point of $0.15, it was obvious that the pandemic had taken a toll. But after that, Ripple followed the major coins in posting a slow run-up through the final quarter of the year. It ran all the way from $0.17 up to $0.62 in November for an all-time high. It appeared that the favorite virtual currency of the financial community was on a roll. But then a major catastrophe hit. The SEC announced legal action against Ripple, and the chart suddenly looked like the left side of a capital V. It was all downward, from $0.60 to $0.20, losing about two-thirds of its value.

The SEC Lawsuit

The legal proceeding against Ripple is quite complex, but its core point alleges that the company sought to raise exorbitant sums of money by manipulating XRP’s price. But the suit was filed by an SEC under the former U.S. administration. Now, a new political party runs things and the suit is in limbo. It’s also worth noting that many government legal challenges are defeated in court by the accused parties, so just because the government filed a case does not mean the company did anything wrong. That question is to be decided at trial, if there ever is one. The negative part of the whole mess, for crypto enthusiasts, is that the current administration is on record as wanting to heavily regulate the entire cryptocurrency market, so the chances the case will wind up in court are pretty high.

Can People Still Buy and Sell XRP?

It’s still possible to purchase and sell XRP. In fact, amid all the legal wrangling and questions about the future, prices have clawed their way back up to the pre-lawsuit announcement level and are hovering around the $0.60 mark once again. It’s as if nothing ever happened. Note that even though Ripple was de-listed by some of the major platforms, you can still acquire it on the ones that continue to offer it. It has not disappeared, dropped off the charts, or frozen trading activity. Every day, many investors are still actively buying and selling it, and will probably continue doing so until the legal situation is resolved.

The Lessons for Investors

Fortunately, tough times often teach us things. Here are a few of the lessons Ripple investors can take from both the COVID pandemic and the prospect of an SEC lawsuit:

  • What the Justice Department does with the former administration’s lawsuit will probably have a significant impact on price, until the suit is resolved.
  • The current political team at the SEC is not crypto-friendly and could end up driving the majority trading overseas if the U.S. shuts it down. The upside is that the cryptocurrency itself is not being sued, just the company. It’s quite possible that even a worst-case scenario would see the coin survive as its own entity and the company forbidden from doing business in the U.S.
  • As people continue to view the entire cryptocurrency market as a safe place to invest and hold assets, it’s possible that Ripple prices could continue to rise for the time being.
  • Federal lawsuits are sometimes very slow-moving beasts, which means the cryptocurrency could be in legal limbo for up to a year. There are all sorts of creative things the company could do, which include selling the coin, XRP, as a stand-alone entity to a willing buyer. Stranger things have happened in the ever-evolving virtual currency niche.