Cryptocurrencies have spent the majority of 2022 in a slump caused by scandal, financial losses, and a public perception issue after reaching a high market value of $3 trillion in 2021.
The FTX collapse shook the cryptocurrency sector. Millions of dollars were invested in the company by renowned investors. Huge losses were also suffered by countless individual dealers. With concerns growing regarding the health of other industry titans like Binance and Crypto.com, it represents one of the biggest issues for cryptocurrency to date.
The Ripple vs SEC case is very crucial for the entire crypto industry. Let’s see why and how?
Ripple’s General Counsel Speaks Out
Ripple’s General Counsel, Stuart Alderoty, expressed his opinion on how significant the XRP case verdict is for the crypto sector. He continued by saying that the decision of the Ripple case will probably have a significant impact on the future of digital assets in the US.
If the SEC prevails in the legal dispute, XRP will no longer be regarded as a currency in the US but rather as a security in 2022. In turn, this might create a legal standard that leads to the classification of related cryptos as securities.
According to Ripple’s general counsel, selling an asset on the secondary market is analogous to selling a commodity and therefore these assets ought to be governed similarly.
Has the FTX debacle weakened the Ripple case?
The recent failure of Sam Bankman-FTX Fried’s cryptocurrency exchange has caused a sharp decrease in the market for digital assets, highlighting the urgent need for legal restrictions.
Former SEC executive Joseph Hall stated that the latest crypto market debacle could affect the court’s decision. He added that the US watchdog will work hard to make it obvious that if the judge finds against them, they will be unable to counter FTX-type situations in the future.
The SEC is sticking to the claim that Ripple is a common enterprise. This claim has become a big issue for the commission once again. The defendants claim that the XRP does not pass the security test because it was sold on the secondary market. It goes on to say that there was no such profit sharing.
Everyone awaits the conclusion of the lawsuit. Ripple winning could provide a lot of clarity in the industry, with an increase in value and trading volume. On the downside, it could appear as a blow to the SEC’s efforts to regulate the cryptocurrency market and enforce investor protections.