The Securities and Exchange Commission in December 2020 sued Ripple Labs, the company whose founders helped create the cryptocurrency XRP. The agency alleged that the business and two executives raised over $1.3 billion through an ongoing offering of unregistered securities. While the price of XRP saw a brief dip after the announcement, the token rebounded the following spring.
Now, with a decision on the lawsuit expected later this year, XRP is riding a month-long price surge—and Ripple said that it sold $226 million worth of the token in a quarterly report it published Monday.
"Ripple remains one of the few crypto firms well capitalized and ready to meet robust customer demand in 2023," the company wrote.
The token increased to approximately 40 cents on Wednesday from about 33 cents at the beginning of the year, according to data from CoinMarketCap. Ripple, which uses the coin for its various payment services, also reported a rise from the previous quarter in the number of new wallets on the XRP blockchain and a slight rise in the amount of transactions. The company's services include processing remittances and cross-border payments.
Central to the government’s allegations is a claim that XRP is a security, and that, through Ripple's sales of the token, the company is all but selling shares without notifying the SEC. In a legal back-and-forth, Ripple has strenuously disagreed, arguing that XRP, created in 2012 as an alternative to Bitcoin, is a commodity and therefore not subject to SEC jurisdiction.
In its quarterly report, Ripple said it expects to see a ruling this year. CEO Brad Garlinghouse, one of two executives named in the lawsuit, even said it’s possible to see a result in the first half of 2023. As of last Wednesday, the court battle rages on, with lawyers battling over the government's motion to exclude the testimony of one of Ripple’s expert witnesses.
XRP is one of the largest cryptocurrencies by market capitalization, and the result of the SEC's lawsuit against Ripple could have significant ramifications. The judge’s decision could radically alter—or in some cases destroy—other crypto-related firms. The SEC reportedly has launched investigations into Binance and BNB, the native token that supports the world’s largest cryptocurrency exchange by trading volume, and into Yuga Labs, the startup most famous for Bored Apes and whose ApeCoin supports other projects it’s developing.
The industry has rallied to Ripple’s defense, including Coinbase, the second-largest cryptocurrency exchange by trading volume.
"Ripple is proud of its defense and feels more confident than ever as it awaits the Judge’s decision," the company wrote in its quarterly report.
A spokesperson for Ripple did not immediately comment on the report or the recent price increase of XRP when reached by Fortune.
