Following news that the Securities and Exchange Commission (SEC) is looking to sue Ripple for selling unregistered securities, crypto exchanges such as Coinbase in the United States have announced that they will soon drop XRP from their lists of offered digital assets and halt trading beginning early 2021.
Coinbase Says “No” To Ripple
Coinbase has stated that all XRP trades will be suspended as of January 19 of this year. The good news is that customers of the exchange will not lose access to their wallet or to their funds, and their accounts will remain open for deposit and withdrawal activity. However, XRP trades through Coinbase will no longer be available.
The company explained in a statement:
Further, customers will remain eligible for the previously announced Spark airdrop (subject to approval in certain jurisdictions), and we will continue to support XRP on Coinbase Custody and Coinbase Wallet.
Following the announcement, XRP – which has been trapped in a downward slide ever since the start of its battle with the SEC – fell even further. At the time of writing, XRP has lost roughly 40 percent of its overall value in just the last week alone.
The SEC initially filed its lawsuit against Ripple and the company’s CEO Brad Garlinghouse in late December. The agency alleges that XRP is a security and not a valid currency, and thus the company engaged in an unregistered token sale worth approximately $1.3 billion in the year 2013. The SEC is now looking to collect on what it feels it’s owed.
However, Ripple heavily disagrees with this sentiment, explaining in a blog post:
The SEC is completely wrong on the facts and law and we are confident we will ultimately prevail before a natural fact finder. XRP, the third largest virtual currency with billions of dollars in trading every day, is a currency like the SEC has deemed bitcoin and ether and is not an investment contract.
Sadly, Ripple appears to be in a rough position considering it’s not just the SEC that believes XRP is a security. In fact, many of the company’s earliest investors consider XRP a security and have filed a class-action lawsuit against Ripple alleging that it lied about the asset’s standing.
A Few Things Working Against Ripple?
Furthermore, Ripple does not appear decentralized at press time considering that more than 60 percent of the XRP units that have been created are still owned by the company’s top executives. Unlike bitcoin and Ethereum, which have largely been distributed to individual traders, most of the world’s available XRP has never left home. This could also potentially work against the company’s status.
December 28 saw XRP trading on Coinbase move into a “limited” phase as the company prepares to snuff it out fully. Despite these negative waves, Ripple is valued at more than $10 billion following a $200 million funding round.