Los Angeles (CoinChapter) – Ripple could be on the verge of burning over $61 billion worth of XRP tokens as their lawsuit with the U.S. Securities and Exchange Commission (SEC) reaches a boiling point.
During a recent interview, Ripple CEO Brad Garlinghouse would not rule out burning the roughly 47.8 billion coins held in the company’s escrow.
The tokens consist of nearly 105% of the current circulating supply and 47.8% of the total supply. In terms of pure cash, they hold a value of $66 billion.
A token burn is exactly what the phrase implies. It is the removal of a certain quantity of a token from the circulating supply. This typically results in the reduction of the token supply and subsequent rise in token value and price.
If Ripple goes this route, it would be in effort of attempting to maintain XRP’s bullish bias. Reducing the token supply would help the token value and price rise. And offset any worries created by the SEC lawsuit.
Ripple previously floated around the possibility of destroying coins held in the company’s escrow last December. Such a decision depends on the network’s nodes, validators, and the community.
SEC not backing down from lawsuit against Ripple
It appears the idea is back on the table as a result of the latest developments in the company’s lawsuit with the SEC. The agency recently asked a federal judge to block Ripple’s demands that the regulator turn over internal emails on officials’ personal devices.
What this signals is that the SEC fully intends to move forward with their lawsuit. The agency is accusing Ripple of selling XRP without properly registering it as a security.
After its latest filing, the SEC is now alleging that Ripple is trying to “harass” the agency and “gamesmanship with respect to discovery.” The case is being closely watched as the outcome could have repercussions for dozens of other altcoins.
U.S. regulators previously have stated that Bitcoin and Ether aren’t securities. But they haven’t said the same about other tokens, meaning they could eventually face lawsuits as well.
XRP price pulls back following developments in SEC case
The price of XRP was trading at $1.09 early Friday morning, which marks an 18% drop from the previous day.
XRP price action. Source: TradingView.com
The XRP price has been on a downward spiral over the past two weeks, dropping from a month-high of $1.73. If Ripple destroys some of its token supply in the coming weeks, it will look to return to that price range.