XRP News Today: SEC Court Filing Deadlines and Appeal Plans

The Sunday Overview

On Sunday, XRP advanced by 0.11%. Partially reversing a 0.45% decline from Saturday (May 4), XRP ended the week up 4.00% to $0.5305.

SEC vs. Ripple: Judgement Day for XRP?

There was no SEC vs. Ripple case-related news for investors to react to on Sunday (May 5). Nevertheless, investors awaited the SEC’s remedy-related reply brief. The SEC must file the reply brief by Monday (May 6) and a redacted version by Wednesday (May 8).

It may be the final court filings in the SEC vs. Ripple case. After the reply brief filing, Judge Analisa Torres will deliberate and rule on the punishment for breaking US securities laws. In July 2023, Judge Torres ruled that Ripple breached Section 5 of the US Securities Act for failing to register XRP as a security in sales to institutional investors.

There is a significant disparity between the SEC and Ripple’s expectations.

The Penalty: $2 Billion vs. $10 Million

In the remedy-related opening brief, the SEC asked the courts to order Ripple to pay a $876,308,712 disgorgement, a prejudgment interest of $198,150,940, and a $876,308,712 civil penalty. Significantly, the SEC also requested the court to prohibit Ripple from selling XRP to institutional investors.

Ripple argued that a civil penalty should not exceed $10 million in the remedy-related opposition brief. Significantly, Ripple cited the three tiers of Section 20 (d) of the Securities Act, stating,

• Tier One: Penalties for general violations.
• Tier Two: Penalties for violations involving fraud, deceit, and manipulation, or intended and reckless disregard for regulatory laws.
• Tier Three: Penalties for violations involving culpable mental state and resulting in direct or indirect substantial losses or resulting in the significant risk of substantial losses to a person or persons.

Ripple highlighted that it should be a tier 1 case, saying that the SEC never accused Ripple of fraud, deceit, or manipulation. The opposition brief also referenced the dismissal of charges against Chris Larsen and Brad Garlinghouse vis-à-vis reckless disregard of a regulatory environment.

Judge Analisa Torres must also decide whether Ripple continued breaching US securities laws after the December 2020 complaint. The SEC justified its call for a $2 billion penalty and injunction by arguing Ripple continued to sell XRP to institutional investors. However, Ripple argued that XRP sales were to accredited investors or via ODL contracts. ODL contracts prevent profits and losses.

Programmatic Sales of XRP Ruling and an SEC Appeal

There could be disappointment for investors hoping that the court ruling will end the SEC vs. Ripple saga. The crypto community expects the SEC to appeal against the Programmatic Sales of XRP ruling. In the July 2023 ruling, Judge Analisa Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

The SEC must wait until the of its case against Ripple to appeal against court rulings. However, the SEC showed its intentions in August 2023 by filing a motion for interlocutory appeal. The court rejected the motion in October 2023, forcing the SEC to wait until the court rules on the penalties for Ripple breaching US securities laws.

The ongoing threat of an SEC appeal against the Programmatic Sales ruling remains an XRP headwind.

XRP Price Action

Daily Chart

XRP sat below the 50-day and 200-day EMAs, sending bearish price signals.

An XRP breakout from the 50-day EMA would bring the 200-day EMA and the $0.5739 resistance level into play. A break above the $0.5739 resistance level could give the bulls a run at the $0.60 handle.

The SEC reply brief filing will be the focal point on Monday (May 6).

Conversely, an XRP drop below the top and bottom trend lines could give the bears a run at sub-$0.50.

The 14-day RSI reading, 48.16, suggests an XRP drop below the $0.50 handle before entering oversold territory.

4-Hourly Chart

On the 4-hourly, XRP remained above the 50-day EMA while hovering below the 200-day EMA. The EMAs sent bullish near-term but bearish longer-term price signals.

An XRP break above the $0.5361 resistance level would support a move to the 200-day EMA. A breakout from the 200-day EMA could give the bulls a run at the $0.5739 resistance level.

However, an XRP drop below the 50-day EMA and the trend lines would bring sub-$0.50 levels into play.

The 14-day RSI reading, 55.77, indicates an XRP move to the $0.5739 resistance level before entering overbought territory.