The increasing popularity of cryptocurrency has opened up new opportunities for individuals and companies alike. One cryptocurrency in particular, XRP, has been enjoying a meteoric rise over the past few months, with its price increasing by over 55% since the start of 2021 and 21.6% in the past seven days alone. Its impressive performance can be attributed to investor hope that Ripple Labs, the company responsible for creating XRP, will be successful in its current legal battle with the U.S. Securities and Exchange Commission (SEC).

The SEC claims that Ripple Labs and two of its co-founders raised $1.3 billion in unregistered securities offering since 2013, a claim that the Ripple Labs team contested by raising a “fair notice defense.” This defense points towards a settlement paid by Ripple Labs to the Department of Justice in 2015 that included the formal recognition that XRP was a virtual currency (not a security). If Ripple Labs is victorious in its legal battle, it would be a major precedent case for the crypto industry that could have far-reaching implications. However, one cannot accurately predict the outcome, despite the hope of investors.

Under Gary Gensler, the new chairman of SEC, the regulator is on a mission to crack down on any unregistered securities in the crypto industry. In the few months since Gensler took office, the SEC has issued hefty fines to some of the US’s major crypto companies, such as Kraken, Genesis and Gemini, and has hinted at penalties for the largest US crypto exchange Coinbase.

It is yet to be seen what will be the outcome between Ripple Labs and SEC, and for the wider crypto industry, but for now, investors of XRP can be hopeful.



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