The cryptocurrency XRP experienced a sharp decline on Thursday following the U.S. Securities and Exchange Commission’s (SEC) appeal of a favorable court ruling in its ongoing legal battle against Ripple Labs.
Judge Had Decided In What Would Be A Partial Victory For XRP
The SEC had sued Ripple in 2020, alleging that the company had violated securities laws by selling XRP without registering it as a security. In a significant victory for the cryptocurrency industry, a U.S. District Judge last year ruled that XRP was only considered a security when sold to institutional investors.
However, the SEC has now challenged this decision, seeking to overturn the ruling and impose a $2 billion civil penalty on Ripple. The agency’s appeal comes just a day after Bitwise Asset Management announced plans to launch an exchange-traded fund (ETF) that would invest directly in Ripple.
The news of the SEC’s appeal sent shockwaves through the cryptocurrency market, leading to a sharp drop in XRP’s price. Many investors had anticipated the launch of XRP ETFs and had positioned themselves accordingly, but the SEC’s move forced a reassessment of the situation.
“There was a lot of optimism around the XRP ETFs, and many traders were long on the token,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “The SEC’s appeal has caused a significant unwind in these positions, leading to the price decline.”
