News Updates on the SEC-Ripple Case Delivers XRP a Boost
Ripple’s XRP jumped by 9.02% on Friday, bucking the broader crypto market trend on the day. News updates on the Ripple v SEC case delivered XRP support, while the rest of the crypto majors tracked the U.S equity markets into the red.
Fair Notice Defense Decision in Favor of Ripple
On Friday, court documents revealed that the presiding judge over the SEC v Ripple case would allow Ripple to use a fair notice defense.
The decision is pivotal to Ripple’s defense and argument that the SEC failed to notify Ripple Lab of a possible violation of SEC laws.
The latest ruling follows a previous judgment in favor of Ripple Lab. In early February, the court ruled in favor of unsealing two legal opinions.
General counsel for Ripple Lab, Stuart Alderoty, took to Twitter in response to the court ruling, saying,
“Today’s order makes it clear there’s a serious question whether the SEC ever provided Ripple with fair notice that its distributions of XRP – since 2013 – would ever be prohibited under the securities law”.
Today’s order makes it clear there’s a serious question whether the SEC ever provided Ripple with fair notice that its distributions of XRP – since 2013 – would ever be prohibited under the securities law. https://t.co/d1X6BWDR5i
— Stuart Alderoty (@s_alderoty) March 11, 2022
Brad Garlinghouse tweeted,
“If you weren’t paying attention then, you should now. Huge win for Ripple today!”
If you weren’t paying attention then, you should be now. Huge win for Ripple today! https://t.co/dMeUQuIPHM
— Brad Garlinghouse (@bgarlinghouse) March 11, 2022
The latest court ruling ties in with the two legal opinions that demonstrated Ripple Lab’s efforts to remain within the boundaries of U.S laws and, more importantly, to address any concerns vis-à-vis the classification of digital assets.
February Court Rulings in Favor of Ripple Lab
The first of the two documents was in relation to NewCoin and the second Ripple Network/OpenCoin.
In the first opinion, dated February 8, 2012, Perkins Coie LLC concluded that:
- Coins that are purchased are likely to be prepaid access: Coins could become subject to regulation as “prepaid access” under the Bank Secrecy Act. This regulates providers and sellers of prepaid access.
- Coins sold to investors could be considered securities: “If sold to Investors who provide Founders with the capital necessary to launch and operate NewCoin, Coins will likely be considered securities and subject to regulation under federal securities laws”.
- Coins not initially sold may still constitute securities if sold at a later date: Coins could be considered securities when sold on the secondary market at a later date.
- Coins may become commodities: Should contracts for future delivery of Coins be developed, they will likely be classified as commodities under the Commodities Exchange Act.
- Exchanges may be treated as money transmitters or currency exchangers.
From the second legal document, Perkins and Coie provided the following opinion:
“Although we believe that a compelling argument can be made that Ripple Credits do not constitute securities under the federal securities laws, given the lack of case law, we believe that there is some risk, albeit small, that the SEC disagrees with our analysis”.
The SEC failed to contest the opinions of Perkins Coie until December 2020.
XRP Price Action
At the time of writing, XRP was up by 3.75% to $0.8329.
XRP will need to avoid the day’s $0.7802 pivot to make another run on the First Major Resistance Level at $0.8349. XRP would need the broader crypto market to support a move back through to $0.8340 levels.
An extended rally would test the Second Major Resistance Level at $0.8675 and resistance at $0.90. The Third Major Resistance Level sits at $0.9556.
A fall through the pivot would bring the First Major Support Level at $0.7474 into play. Barring an extended sell-off, XRP should steer clear of sub-$0.80. The Second Major Support Level sits at $0.6924.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bullish signal. XRP sits well above the 50-day EMA, currently at $0.7468.
This morning, the 50-day and the 100-day EMAs have converged on the 200-day EMA, signaling an imminent move. A bullish cross of the 50-day and 100-day EMAs through the 200-day EMA would bring $0.90 levels into play.
Holding above the day’s pivot and the 50-day EMA will be the key to supporting another breakout day ahead.