The SEC vs. Ripple Labs lawsuit took a somewhat unexpected turn, breathing new life in the case just before an important deadline.
The XRP (XRP -8.91%) cryptocurrency, commonly known as Ripple, saw a sharp price drop on Thursday. The coin, which serves essential functions in the RippleNet international payments system, dropped as much as 11.9% in 24 hours. The price drop is the result of the Securities and Exchange Commission (SEC) filing an appeal in its long-running lawsuit against Ripple Labs.
The SEC lawsuit is still alive
Many Ripple investors expected the SEC lawsuit to run its course this week, as the deadline for appeals loomed on Oct. 7. The SEC chose to keep the case alive instead, arguing that the $125 million penalty “conflicts with decades of Supreme Court precedent and securities laws.”
Ripple Labs representatives called the filing “disappointing” and not in the best interest of investors.
The Ripple token’s price rose 22% in two months as the appeals deadline drew closer. The move outpaced both the S&P 500 index and Bitcoin over this span. Investors saw the federal circuit court victory in August as a positive sign for the crypto industry in general and XRP in particular. The appeal took some of the bullish wind out of those billowing sails.
How far will this case go?
The Ripple team now has 14 days to file cross-appeals for the portions it lost in the circuit court proceedings. Filings, arguments, and judicial opinions will continue to flow for the foreseeable future.
Ripple Labs CEO Brad Garlinghouse vowed to keep fighting, but also noted that the initial verdict already settled many important matters.
“XRP’s status as a non-security is the law of the land today — and that does not change even in the face of this misguided — and infuriating — appeal,” Garlinghouse wrote in an X post. “Remember, when the SEC tried unsuccessfully to file an ‘interlocutory appeal’ they made clear they had no intention of challenging XRP’s status as a non-security.”
So the SEC lawsuit saga continues. I’m no lawyer, but cases like this one could end up in the U.S. Supreme Court when all is said and done. That’s a long process with many uncertain stops along the way.
Crypto investors crave regulatory and legal certainty, and this appeal will have the opposite effect. The final outcome is now back to “unpredictable” and today’s price drop for XRP tokens makes sense against that backdrop.
Anders Bylund has positions in Bitcoin and XRP. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.