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SHOULD YOU INVEST IN XRP?
After a 350% bull run in November followed by a +60% drop in December… 𝗪𝗛𝗔𝗧'𝗦 𝗡𝗘𝗫𝗧 for XRP?
10X to a new all time high? A collapse to near zero? 𝗕𝗢𝗧𝗛 𝗔𝗥𝗘 𝗣𝗢𝗦𝗦𝗜𝗕𝗟𝗘!
Let’s quickly discuss which is more likely!
THE NEGATIVE:
Ripple has been charged with conducting investments without proper licences by the US Securities and Exchange Commission. The SEC is suing the San Francisco based payments company for selling the cryptocurrency “XRP” as an 𝗨𝗡𝗥𝗘𝗚𝗜𝗦𝗧𝗘𝗥𝗗 𝗦𝗘𝗖𝗨𝗥𝗜𝗧𝗬.
The SEC is claiming that Ripple's XRP token is in fact a tradable asset, known as a security, and thus subject to its regulations.
Ripple denies this claim, maintaining their belief that XRP is nothing more than a 𝗩𝗜𝗥𝗧𝗨𝗔𝗟 𝗖𝗨𝗥𝗥𝗘𝗡𝗖𝗬. Ripple CEO - Brad Garlinghouse has confirmed that they will be appealing the SEC’s decision in court by saying:
“𝑻𝒉𝒆 𝑺𝑬𝑪 𝒊𝒔 𝒄𝒐𝒎𝒑𝒍𝒆𝒕𝒆𝒍𝒚 𝒘𝒓𝒐𝒏𝒈 𝒐𝒏 𝒕𝒉𝒆 𝒇𝒂𝒄𝒕𝒔 𝒂𝒏𝒅 𝒕𝒉𝒆 𝒍𝒂𝒘 𝒂𝒏𝒅 𝒘𝒆 𝒂𝒓𝒆 𝒄𝒐𝒏𝒇𝒊𝒅𝒆𝒏𝒕 𝒘𝒆 𝒘𝒊𝒍𝒍 𝒖𝒍𝒕𝒊𝒎𝒂𝒕𝒆𝒍𝒚 𝒑𝒓𝒆𝒗𝒂𝒊𝒍 𝒃𝒆𝒇𝒐𝒓𝒆 𝒂 𝒏𝒆𝒖𝒕𝒓𝒂𝒍 𝒇𝒂𝒄𝒕-𝒇𝒊𝒏𝒅𝒆𝒓."
However, The SEC claims to have a water tight case against Ripple citing such issues including:
⚡ Ripple has sold XRP widely into the market specifically to individuals who have 𝗡𝗢 𝗨𝗦𝗘 for XRP. Despite Ripple touting potential future uses of XRP for specialised institutions, no such methods of exist today for individual investors.
⚡ Ripple’s 𝗘𝗫𝗣𝗘𝗡𝗦𝗘𝗦 reached $275m for 2018, yet sales for their two software suites xCurrent & xVia only earned the business $23m up until 2019. Ripple did earn over $250m in equity sales from 2016-18 however the majority of Ripple’s revenues have come from its sales of XRP.
⚡ Ripple incentivised trading platforms and paid $70m worth of XRP to use the token. The company also sold XRP to 𝗜𝗡𝗦𝗧𝗜𝗧𝗨𝗧𝗜𝗢𝗡𝗦 at 5-30% discount vs the public market (where these XRP token were eventually offloaded to).
⚡ The "XRP Army" continue to use the expression 𝗛𝗢𝗗𝗟 on Social Media platforms. The SEC believes this shows proof that holders of XRP are treating their tokens like an investment and not a utility.
some crypto exchanges have already began to delist XRP & It’s likely that we’ll see more investment platforms remove XRP (at least temporarily) as they look to avoid 𝗟𝗘𝗚𝗔𝗟 𝗧𝗥𝗢𝗨𝗕𝗟𝗘 whilst Ripple’s lawyers battle it out in court!
THE POSITIVE:
SEC chairman Jay Clayton coincidently resigned on Wednesday just days after his recent action against Ripple! Under the watch of Mr Clayton, the SEC has been strictly against cryptocurrencies however new Interim Chairman Elad Roisman may well take a 𝗦𝗢𝗙𝗧𝗘𝗥 𝗦𝗧𝗔𝗡𝗖𝗘!
Even if new Chairman Roisman picks up from where Clayton left off, The SEC’s complaint only "𝗔𝗟𝗟𝗘𝗚𝗘𝗦" that XRP is a security and does not guarantee that Ripple won’t win when they meet in court! In fact, Ripple has a solid case of it’s own including:
⚡ In 2015, the 𝗨𝗦 𝗚𝗢𝗩𝗘𝗥𝗡𝗠𝗘𝗡𝗧 concluded that XRP was indeed a virtual currency!
⚡ Ripple has 𝗦𝗛𝗔𝗥𝗘𝗛𝗢𝗟𝗗𝗘𝗥𝗦, If people want to invest in Ripple they do not buy XRP but rather shares in Ripple.
⚡ The SEC has allowed investors to trade XRP for 8 years. Their opportunity to label XRP a security has long passed and now that there are so many holders of the token - It would be far too 𝗗𝗔𝗠𝗔𝗚𝗜𝗡𝗚 to thousands of investors if they were to change their stance!
Even if Ripple were to lose in court and the US permanently labelled XRP a security, the token is use 𝗚𝗟𝗢𝗕𝗔𝗟𝗟𝗬 and therefore the SEC’s case alone would not necessarily send XRP to zero!
in fact, 90% of XRP’s 𝗧𝗥𝗔𝗗𝗜𝗡𝗚 𝗩𝗢𝗟𝗨𝗠𝗘 occurs outside of the US. Unfortunately, Ripple stands to lose more than just a 10% reduction in its total addressable market with the company fighting to protect its reputation!
SUMMARY:
Expect a lot of negative headlines about Ripple & XRP over the next few months and don’t be surprised by the 𝗦𝗘𝗟𝗟𝗜𝗡𝗚 𝗣𝗥𝗘𝗦𝗦𝗨𝗥𝗘 that this will create! Exchanges will likely freeze your ability to buy XRP, whilst many investors will no doubt panic and sell their tokens before a verdict is reached by the US government.
Ripple is about to have the 𝗙𝗜𝗚𝗛𝗧 𝗢𝗙 𝗜𝗧𝗦 𝗟𝗜𝗙𝗘! BUT if they can take on the SEC and win – this validation will send Ripples around the globe and the 𝗫𝗥𝗣 𝗔𝗥𝗠𝗬 𝗪𝗜𝗟𝗟 𝗕𝗘 𝗕𝗔𝗖𝗞 𝗜𝗡 𝗙𝗢𝗥𝗖𝗘!
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