This edition of “Crypto’s Last Week” accounts for the most notable, and crypto-related — institutional, investment, or regulatory — news published between Saturday, December 19, 2020, and Friday, December 25, 2020.
The second half of December 2020 has kept this year’s news rollercoaster on the go, with the latest Securities and Exchange Commission (SEC) lawsuit filing against Ripple, its Chairman Chris Larsen, and CEO Bradley Garlinghouse for an alleged securities fraud worth over $1 billion since 2013.
According to its website, Ripple is an “enterprise blockchain company today with products in commercial use by hundreds of customers across 55+ countries. These businesses have access to alternative liquidity solutions through Ripple’s global network, which uniquely uses the XRP Ledger and its native digital asset XRP to help improve payments services worldwide.”
To share some context, this legal offensive from the SEC comes weeks after Ripple’s CEO had publicly stated that leadership within the blockchain company was considering its alternatives regarding the location of its headquarters due to “regulatory uncertainty” in the USA. This could indicate that Ripple leadership was aware of the potential legal actions being prepared against it and intended to use public opinion in its favor.
Adding to the drama of what has been an already dramatic year on all fronts, Ripple leadership has brought to attention the fact that other US regulators have treated XRP as a currency and blockchain-friendly countries Singapore, Switzerland, and Japan have already discarded XRP as a security. Moreover, Ripple leadership has questioned the SEC’s motives since it had waited for 8 years to take these actions and considered it might be the last shots of an anti-crypto administration with “one foot out of the door […] shamefully leaving the legal work for the next chairman.”
The market has since, reacted rather negatively to the news, with an intense sell pressure over the XRP token clearing its November gains when it reached $0.7 vis-a-vis its current price of $0.2. Additionally, there have been reports of small crypto exchanges such as OSL, Beaxy, and CrossTower delisting or halting trades of the token awaiting further developments.
There have also been reports of more important virtual asset service providers such as Bitwise, completely liquidating its $9.3 million worth of XRP, which previously accounted for over 3% of the Bitwise 10 Crypto Index Fund, crypto payment processor Simplex, which provides services to top-level crypto exchanges such as Binance, Huobi, KuCoin, and Bitpay, among others, has also been reportedly begun to block XRP transactions.
Finally, Galaxy Digital and Jump Trading have halted all market-making activities pending further information from regulators. This is an expected reaction from crypto service providers due to the legal risks of having recorded transactions after the fact of the lawsuit being made public.
With this cherry to top 2020, we will most certainly have a rocky start to 2021 and will keep an eye for the legal precedent that having one of the top cryptocurrencies in volume terms be attacked in such a direct way may have for the industry.
“I think we have to stand up for all of crypto — and not let the SEC bully the entire industry.” — Brad Garlinghouse
Thank you for joining us and reading “Crypto’s Last Week.”