Key Takeaways:
- Ripple blockchain’s native token XRP soared over 40% across the previous five days, compliant with the Bitcoin-initiated recovery wave.
- The U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple continues with a new judge and revealed emails.
YEREVAN (CoinChapter.com) — Ripple’s in-house token XRP traded at $0.78 in the New York session on Feb. 7 following a 17% upside move in the 24 hours. However, the bullish streak started on Feb. 3, after the previous sideways consolidation week.
In detail, Bitcoin’s multi-factor rally caused a recovery wave across the market on Jan 23. Many altcoins followed immediately, others stalled for a week before complying, and XRP was one of them.
As a result of the rally, the token’s 20-day exponential moving average (EMA-20; blue wave on the chart below) corrected its trajectory upward after weeks of bearish bias. However, XRP still has to break above the EMA-50 (red wave).
Additionally, the asset’s relative strength index (RSI; purple graph at the bottom) reached 67, a three-month high for XRP. In detail, the RSI is a momentum indicator that reflects the traders’ assessment of possible returns.
Also read: XRP price drops 7% as SEC vs. Ripple case goes on with a 'Wall Street watchdog' on patrol.
When the RSI is between 50 and 70, traders consider the token bullish enough to grant high investment returns. However, the coin’s fate remains dependent on the lawsuit outcome between the SEC and Ripple.
SEC vs. Ripple
In detail, the Securities and Exchange Commission is a governmental agency responsible for monitoring the financial market and enforcing laws against fraud and market manipulation. The fast-expanding crypto market also falls under the SEC’s jurisdiction, but the laws surrounding cryptocurrencies are not yet clear.
Nonetheless, the SEC accused the Ripple CEO Brad Garlinghouse and the former CEO Chris Larsen of fraud in Dec 2020. The agency claimed that Ripple sold $1.3 billion worth of XRP as ‘unregistered securities,’ violating U.S. investment laws.
Also read: Ripple's fair notice defense faces a new challenge from the SEC.
Fast forward to a year later, the lawsuit is far from over. In the latest developments, Judge Ana Lisa Torres took the case over from Judge Sarah Netburn, which the community took as a positive sign. However, Judge Torres granted SEC’s motion to reveal certain documents, which Ripple sough to seal.
SEC evidence seal denied
Two of the documents in question are of particular interest to the case. The first is an email from Brad Garlinghouse to all Ripple employees from June 2017.
Attorney Jeremy Hogan, who has been involved in the case, offered his comments on the revealed emails on Feb 5. He asserted that the excerpt presented below could compromise Ripple’s defense, as the CEO hinted at a “price increase” and called XRP holders “investors,” which the SEC intends to use against him.
Despite a proven track record of being good stewarts of XRP, we had continued to hear concerns in the market that Ripple could (hypothetically) sell our 61 billion XRP at any time – a scenario that would certainly be bad for Ripple! So with the decision to lock up 55 billion XRP in escrow, we have given investors a predictable supply schedule[…].
read the letter.
Also read: SEC Chair Gensler's speech raised eyebrows at Ripple.
The second email is a reply from ex-CEO Chris Larsen to an XRP investor Carlos Martens. The latter wrote Mr. Larsen, saying that he was thinking of dropping his €30,000 XRP investment.
We believe XRP is uniquely valuable in the new world we’re entering as a bridge currency. […] Thus, the strategy of focusing on connecting banks serves both emerging trends – the more banks that connect though Ripple Connect and ILP, the more demand we should see for XRP as an asset to reduce liquidity costs.
answered Mr. Larsen.
According to Attorney Hogan, the emails contain no direct promise of a price increase. However, both hint at a possible value growth, which the SEC could use to underscore the company’s intent for market manipulation. The upcoming hearings will show if Ripple can defend itself against the accusations.
