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XRP News: Ongoing Investigation Threatens SEC Plans to Appeal Court Ruling

By:
Bob Mason
Published: Feb 20, 2024, 03:36 UTC

Key Points:

  • XRP rose by 1.01% on Monday, ending the session at $0.5627.
  • Increased US lawmaker scrutiny of SEC activity could impact SEC plans to appeal against the Programmatic Sales ruling.
  • SEC v Ripple, SEC activity, and US lawmaker chatter warrant investor attention.
XRP News

The Monday Overview

On Monday, XRP rose by 1.01%. Following a 1.35% gain on Sunday, XRP ended the session at $0.5627.

Remedies-Related Discovery and Last-Minute Filings

On Monday, there were no SEC v Ripple case-related updates. The US courts were closed for President’s Day. However, remedies-related discovery ends on Tuesday, February 20. Last-minute filings will need consideration.

The SEC is looking to quickly conclude the case to appeal against the Programmatic Sales of XRP ruling. Nonetheless, the SEC is also pushing for a punitive penalty for Ripple not registering XRP as a security in sales to institutional investors.

Last-minute filings in discovery could affect the timeline for the filing of remedy-related briefs. According to the Court briefing schedule, the SEC must file a remedy-related brief by March 13. Ripple must file its remedy-related brief by April 12. The SEC can respond to the Ripple filing with a reply brief by April 19.

The briefs will influence the quantum of the penalty Ripple must pay for breaching Section 5 of the US Securities Act. Considering Ripple’s legal bill, the crypto community and Ripple will likely stomach anything less than the estimated $200 million legal bill.

However, between now and the court ruling, SEC Chair Gary Gensler and the SEC could face more scrutiny from the courts and US lawmakers.

On Monday, Ripple Chief Legal Officer reacted to a Wall Street Journal news article, saying,

“The Wall Street Journal again calls out the fact that “Americans live under constant threat of an arbitrary administrative state” from lawless regulators. The last line of defense are the courts, and the lawyers and clients willing to fight.”

The US courts have proven to be the last line of defense. Recently, the SEC v Debt Box case became high profile after the court ordered,

“The SEC to show cause why it should not be sanctioned for making false and misleading representations to the court.”

The SEC responded to the order by filing a Motion to Dismiss, dropping the charges against Debt Box. Within the Motion to Dismiss, the SEC argued,

“While the Commission recognizes that its attorneys should have been more forthcoming with the Court, sanctions are not appropriate or necessary to address those issues.”

Presiding Judge Robert Shelby may still call on the SEC to give more justifiable reasoning to avoid sanctions. The crypto community may argue that the courts let the SEC off the hook if there are no sanctions.

However, recent cases suggest that the SEC may avoid further sanctions despite Judge Shelby’s court order.

The SEC Faces Troubled Times in the US Courts

In December, Alderoty shared several examples of the courts criticizing SEC behavior. The increased court scrutiny of the SEC could influence the outcome of ongoing cases against crypto firms.

Moreover, continued inappropriate actions may require US lawmakers to follow through on recent threats.

On February 7, five US Senators, including Senator Cynthia Lummis, co-signed a letter to SEC Chair Gary Gensler. The Senators reacted to the SEC dropping the charges against Debt Box. Significantly, the Senators threatened scrutiny of other enforcement cases.

Last week, Chair Gensler attempted to brush off the increased scrutiny, saying,

“I think we’re doing everything according to the law and how the courts interpret the law. And as the courts shift their interpretations, jobs like mine are both more challenging and more interesting.”

The infractions with the courts and Gensler’s comments may draw more scrutiny from US lawmakers. In September, Chair Gensler gave testimony at a Financial Services Committee hearing. Committee Chair Patrick McHenry had this to say to the SEC Chair,

“You said the law is clear, but your actions have created more confusion and lasting damage.”

Committee Chair Patrick McHenry also issued a threat to the SEC Chair, saying,

“As I said, our patience is running thin. The SEC is not above the law nor is it unique. […] Let me be clear, I do not want to be the first chairman of this Committee to issue a subpoena to the Securities and Exchange Commission. And you should not want to be the first SEC Chair to receive a Congressional Subpoena.”

In January, the crypto community called on Chair McHenry to follow through with his threats to subpoena Chair Gensler. US lawmakers may need to step forward and address recent infractions by the SEC. Increased scrutiny could force the SEC to rethink plans to appeal against the Programmatic Sales of XRP ruling.

SEC Plans to Appeal an SEC v Ripple Court Ruling Are Under Threat

An ongoing Office of Inspector General (OIG) investigation into reports of conflicts of interest could incentivize US lawmakers to investigate SEC practices. If the OIG finds evidence of conflicts of interest, the SEC may have to end plans to appeal against the Programmatic Sales ruling. The investigation relates to former SEC Director William Hinman.

Empower Oversight sued the SEC in 2021. The US non-profit government watchdog claimed William Hinman received millions of dollars from his former employer, Simpson Thacher, while guiding crypto regulations at the SEC. Simpson Thacher is part of a group promoting Enterprise Ethereum. Hinman returned to Simpson Thacher after leaving the SEC.

Court-related documents revealed Hinman continued meeting Simpson Thacher despite warnings from the SEC’s ethics division.

An end to SEC plans to appeal against the Programmatic Sales ruling would be a boon for XRP and the broader market.

XRP Price Action

Weekly Chart sends bullish price signals.
XRPUSD 200224 Weekly Chart

Daily Chart

XRP remained above the 50-day and 200 EMAs, affirming bullish price signals.

An XRP breakout from the $0.57 handle would bring the $0.5835 resistance level into play.

SEC v Ripple case-related chatter, OIG investigation updates, and US lawmaker scrutiny need consideration.

However, a drop below the 200-day EMA would bring the 50-day EMA and the $0.5470 support level into play.

The 14-day RSI reading, 58.90, suggests an XRP return to the $0.5835 resistance level before entering overbought territory.

XRP Daily Chart sends bullish price signals.
XRPUSD 200224 Daily Chart

4-Hourly Chart

On the 4-hourly, XRP hovered above the 50-day and 200-day EMAs, confirming the bullish price trends.

An XRP return to the $0.57 handle would give the bulls a run at the $0.5835 resistance level.

However, a break below the 50-day EMA and the $0.5470 support level would support a fall to the 200-day EMA.

The 4-hourly RSI, with a reading of 55.17, indicates an XRP return to the $0.5835 resistance level before entering overbought territory.

4-Hourly Chart sends bullish price signals.
XRPUSD 200224 4-Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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