What you need to know about XRP as CBDC projects, SEC combination resolution looms Photo: Larina Marina/Shutterstock

The US Securities and Exchange Commission (SEC) lawsuit against Ripple Labs, developer of the Ripple (XRP) cryptocurrency, is entering its next phase, which observers and investors hope will bring the case closer to conclusion.

The lawsuit, filed in 2020, weighed on the price of XRP. The coin is not available for investors in the United States. The exchanges delisted it in response to the uncertainty created by the case. The SEC alleges that XRP is a security and was sold without permission. XRP denies the claim.

What is XRP and how does it work? Here we take a look at the definition of Ripple and explore what the Ripple lawsuit means for the future of cryptocurrency.

What is Ripple?

Ripple Labs is a company founded in 2012 by David Schwartz, Jed McCaleb, Arthur Britto and Chris Larsen to manage the XRP Ledger. The company was formerly known as NewCoin and OpenCoin before adopting the name Ripple in 2013. XRP Ledger (XRPL) is a blockchain intended to provide a faster, cheaper, more scalable and sustainable alternative to the Bitcoin blockchain .

Yet, what is XRP? XRP is the native Ripple coin that enables transactions on the blockchain.

Transactions on XRPL take 3-5 seconds and cost around $0.0002 to complete a transaction. The blockchain can process 1,500 transactions per second and consumes less electricity than Bitcoin.

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How does Ripple work?

XRP was created with 100 billion coins, and no more can be produced. According to the XRP website: “The founders of XRPL offered 80 billion XRP, the native currency of the platform, to Ripple. To ensure the predictability of XRP supply, Ripple has locked 55 billion XRP (55% of the total possible supply) in a series of escrows using the XRP Ledger itself. XRPL’s transaction processing rules, enforced by the consensus protocol, control the release of XRP. As of September 2022, around 44 billion XRP coins remained in escrow.

What is the role of Ripple in the functioning of XRP? Ripple Labs is focused on promoting XRP as a way to efficiently transfer currency between countries, enabling cross-border payment services and real-world microtransactions for financial institutions and individuals.

XRP also has applications in trading. As its website states: “XRP’s low transaction fees, reliability, and high speed allow traders to use the digital asset as fast, cost-effective, and reliable collateral across trading platforms – by grabbing arbitrage opportunities, managing margin calls and managing general trading inventory in real time.”

Since 2021, Ripple has been working with the central banks of several countries on the launch of central bank digital currencies (CBDC) on the XRP Ledger, including in Bhutan, Palau and the United Kingdom. On August 31, the Digital Dollar Project announced that its technical Sandbox program would begin in early October to explore technical implementations of a US CBDC, with participation from Ripple alongside Digital Asset, EMTECH, and Knox Networks.

Ripple CBDC Advisor Antony Welfare hinted in a Tweeter on September 6 that there will be “further CBDC announcements in the coming weeks.”

Ripple Labs has also developed its On-Demand Liquidity (ODL) product to help banks and other financial institutions that use its RippleNet banking network to offer fast and convenient cross-border, remittance and settlement services. Its latest partners are Travelex Bank in Brazil, FOMO Pay in Singapore and FINCI in Lithuania.

“Liquidity on Demand enables RippleNet customers to leverage the digital asset XRP to link two currencies in three seconds, ensuring that payments are quickly sent and received in local currency on either side of the transaction,” according to the Ripple website.

XRP Price History

Ripple coin XRP has had a tumultuous price history, soaring during the 2017 cryptocurrency rally from $0.006 to an all-time high of $3.84 on January 4, 2018. The price quickly fell when the markets crashed, falling to $0.4844 on March 30, 2018 and trading at $0.1151 in March 2020.

How does Ripple SEC news affect the price of Ripple coins? XRP traded as high as $0.768 in November 2020, but fell to $0.2276 by the end of the year after the SEC filed its lawsuit. XRP traded below $1 until 2021, when crypto markets began their next major rally, peaking at $1.96 in April 2021.

XRP USD Price Chart, 2013-2022

Past performance is not a reliable indicator of future results

XRP fell to $0.5179 in July 2021 and rebounded to $1.41 in September 2021, but has largely trended lower over the past year. The price fell to $0.5587 at the end of January, from $0.85 at the start of 2022, and while it reached $0.9111 in February, XRP began to fall sharply in April.

The price of XRP fell to $0.345 on May 12 as crypto markets reacted to the collapse of Terra Luna coins and the US dollar surging to 20-year highs. XRP has since traded in a range of $0.31-0.39.

Ripple v SEC to make documents public

The SEC filed a lawsuit against Ripple and two of its executives on December 22, 2020, alleging that the $1.3 billion in sales of XRP to retail investors violated regulations governing public offerings of securities, on the basis of his view of XRP as a digital asset or security. , rather than a cryptocurrency. The complaint stated:

“From at least 2013 to the present, defendants have sold over 14.6 billion units of a digital asset security called ‘XRP’, in exchange for cash or other consideration of a worth over US$1.38 billion, to fund Ripple’s operations and enrich Larsen and Garlinghouse.

“Defendants undertook this distribution without registering their offers and sales of XRP with the SEC, as required by federal securities laws, and no exemption from this requirement applied.”

What is Ripple’s defense? Ripple Labs responded in its opening statement:

“This theory ignores, among other things, that XRP performs a number of functions that are distinct from the functions of “securities” as the law has understood that term for decades. For example, XRP functions as a medium of exchange – a virtual currency used in international and domestic transactions today – moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as such.

In the latest XRP trial update on September 12, the judge handling the case approved a request by Ripple and the SEC to release portions of their filings as the case will set legal precedent for the regulatory treatment of cryptocurrencies. According to the joint programming proposal, redacted versions of the briefs will be made public on September 19. The case is expected to continue until 2023.

Jurist James Filan tweeted a timeline update on Sept. 6, noting that “there are still many cases pending.” Motions for summary judgment and a statement of uncontested facts were due September 13, with responses due October 18. Replies to these replies must be filed before 15 November.

“I stand by my prediction that District Judge Torres will decide both expert motions and motions for summary judgment — no later than March 31, 2023,” Filan said.

XRP was delisted from cryptocurrency exchanges in early 2021 after the SEC filed lawsuits including Crypto.com, Coinbase and OKCoin, as well as cryptocurrency payments provider Wirex and the Ziglu UK banking app.

Following XRP’s initial price response to the lawsuit filing in December 2020, price analysis shows that the coin has largely followed the direction of the broader bitcoin-led cryptocurrency markets.

The price of XRP fell along with other cryptocurrencies on May 12, when TerraUSD and luna coins crashed and sold further on bearish market sentiment in June. The price of XRP rose from $0.3595 to $0.332 on September 13 as cryptocurrencies and stocks sold off quickly in response to a stronger than expected US inflation report.

Advantages and disadvantages of Ripple

There are pros and cons of choosing to invest in Ripple coin, including:

XRP opportunities:

  • XRP enables fast and inexpensive transactions

  • XRP is used by financial institutions around the world to enable cross-border payments

  • Individuals and businesses can use XRP to make secure payments

  • Ripple is working on CBDCs with multiple countries, including research in the US and UK

XRP Risks:

  • The outcome of the SEC lawsuit remains uncertain

  • XRP is not available for trading on several major crypto exchanges, limiting access and liquidity

  • Many Ripple partners use its blockchain services without XRP

  • Ownership of XRP is concentrated among Ripple’s management

If you are interested in trading XRP, we strongly recommend that you always do your own research. Check out the latest news on XRP and the SEC case as well as market trends, technical and fundamental analysis and expert opinion before making any investment decisions. Keep in mind that past performance does not guarantee future returns. And never invest money you can’t afford to lose.


How long has XRP been around?

XRP was launched as an alternative to bitcoin in 2021. The altcoin was designed to offer faster and cheaper blockchain-based transactions.

Why is XRP in a lawsuit with the SEC?

The SEC filed a lawsuit against Ripple Labs in December 2020, claiming it was illegally selling XRP as an unregistered security. Ripple fights claims, saying XRP is a cryptocurrency like bitcoin and ether, not a security.

Is XRP likely to win the case?

Ripple has received rulings in its favor during the case, such as using statements from SEC officials that contradict SEC claims. However, the final outcome of the case is uncertain.

Further reading:

Digital Art XRP logo, with the X shape in a circle on a dark blue background
XRP tokens, candle charts rising and falling in the background