Key Takeaways:
- XRP price plummeted to $0.41 after court ruling against SEC's request.
- XRP whales liquidated holdings, increasing selling pressure and contributing to price drop.
- Binance reserves surged as investors prepared to sell following the ruling.
LUCKNOW (CoinChapter.com) — A federal court has denied the Securities and Exchange Commission’s (SEC) request for $876 million in disgorgement from Ripple (XRP) Labs. Judge Analisa Torres of the US District Court for the Southern District of New York issued this ruling on August 7. Following this decision, XRP price dropped to the year low at $0.41.
Court Finds Lack of Evidence for Investor Harm
Judge Torres rejected the SEC’s disgorgement request in the Ripple case, citing insufficient evidence of harm to XRP buyers. The decision relied heavily on a recent Second Circuit ruling in SEC v. Govil, which established that disgorgement is only appropriate when identifiable victims suffered financial losses.
While denying the disgorgement request, the court did impose a $125 million civil penalty on Ripple and granted a narrowed permanent injunction against future securities law violations. This outcome is significantly less severe than the nearly $2 billion in remedies initially sought by the SEC.
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Sharp Decline in XRP Price Following Court Ruling
Following the court’s ruling, XRP’s price plummeted. XRP’s exchange reserves on Binance increased around the time of the ruling. This reserve surge suggests that a substantial number of XRP tokens were deposited onto the exchange, likely in anticipation of a sell-off.
As exchange reserves spiked, XRP’s price dropped sharply, indicating that many investors were preparing to liquidate their holdings. This sell-off contributed to the downward pressure on XRP, driving its price to $0.41, a year-to-date low.
In addition to the overall market sell-off, the behavior of XRP whales played a crucial role in the price decline. Notably, wallets holding between 100 million and 1 billion XRP saw a significant reduction in their holdings around the time of the ruling.
This suggests that these large investors were liquidating their positions, further contributing to the market downturn.
