XRP Returns to sub-$0.40 ahead of Ripple’s Friday Court Date

Bob Mason
Updated: May 12, 2022, 06:48 GMT+00:00

The SEC battle against Ripple looks set to resume, with Ripple Lab to respond to the SEC's attempts to shield William Hinman's speech-related documents.

SEC v Ripple Court Date Nears

Key Insights:

  • Risk aversion continued to plague the crypto market, with XRP down 13% this morning.
  • The market angst comes ahead of the next court day in the SEC case against Ripple Lab.
  • Key technical indicators bearish. XRP sits well below the 50-day EMA.

On Wednesday, XRP tumbled by 19.1%. The sell-off came as investors prepare for another Sec v Ripple court date. Reversing a 5.23% gain from Tuesday, XRP ended the day at $0.4152.

A bearish session saw XRP slide to a day low of $0.3655 before a partial recovery to $0.41.

XRP last sat at sub-$0.40 in February 2021, coinciding with the time of the SEC lawsuit against Ripple Lab. XRP fell to a low of $0.1710 on news of the SEC lawsuit.

Crypto market conditions have yet to improve, while XRP investors need to turn attention to the next SEC v Ripple court date.

Ripple Defendants to Reply to the SEC Brief on William Hinman’s Documents

On Friday, Ripple defendants will respond to the SEC’s brief claiming the Hinman documents are protected by the attorney-client privilege.

The Securities and Exchange Commission is then due to respond to Ripple Defendants’ comments on May 18.

For Ripple Lab, a motion against the SEC could wrap up a case that has continued to draw interest since 2020.

Hinman, former SEC Director of the Division of Corporation Finance, is a central figure in the SEC v Ripple case.

By way of background, Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities in a 2018 speech. The SEC is looking to shield documents and emails relating to internal discussions and Hinman’s famous speech.

However, William Hinman’s influence on the case goes beyond the famous 2018 speech.

Former SEC Director William Hinman Is a Central Figure for Ripple

Last year, FX Empire reported on Empower Oversight filing a lawsuit against the SEC. The lawsuit claims that former SEC officials were biased against Ripple Lab and XRP in favor of Ethereum.

In January, non-US XRP investors petitioned for an investigation into the SEC’s moves against Ripple Lab. The petition claimed,

The SEC enforcement actions on cryptocurrencies have involved the appearance of improper ties and conflicts of interest among officials, and should be investigated.”

The petition also pointed out that petition attorney John Deaton,

Has compiled evidence that SEC officials may have colluded with outside parties to regulate cryptocurrencies in line with their personal financial interests.”

While the SEC focuses on the Hinman speech documents and emails, the conflict of interest remains another Achilles heel in the SEC’s case.

In April. Empower Oversight shared emails from the SEC ethics office warning hinman of his direct financial interest in Simpson Thacher. Hinman continued to meet with the firm despite the ethics office warnings.

Simpson Thacher forms part of a group that promotes Enterprise Ethereum. Hinman’s 2018 speech caused an ETH spike ahead of the SEC’s lawsuit against Ripple lab that caused a sharp XRP sell-off.

The continued lack of attention on the ethics office emails and alleged conflict of interest has given Empower Oversight cause for more action.

Empower Oversight Calls for Investigation into SEC Ethics Office Failings

On Tuesday, Empower Oversight issued a press release relating to Hinman’s conflict of interest.

According to the announcement,

“Empower Oversight sent a letter to the Office of the Inspector General of the Securities and Exchange Commission (SEC-OIG) requesting a comprehensive review of the SEC’s ethics officials to properly manage SEC official William Hinman’s potential conflict of interest regarding cryptocurrency issues.”

The press release also highlights that Hinman received more than $1.5 million in retirement benefits from Simpson Thacher while under the employment of the SEC. Hinman re-joined Simpson Thacher in 2021.

With the Securities and Exchange Commission under pressure from Empower Oversight, the next 6-days could prove pivotal in the SEC v Ripple case.

XRP Price Action

At the time of writing, XRP was down 13.34% to $0.3598. A mixed start to the day saw XRP rise to an early morning high of $0.4277 before sliding to a low of $0.3545.

Ripple court date to influence XRP.
XRPUSD 120522 Daily Chart

Technical Indicators

XRP will need to move through the $0.4344 pivot to target the First Major Resistance Level at $0.5032. XRP would need broader crypto market support to breakout from $0.45.

In the event of an extended rally, XRP should test the Second Major Resistance Level at $0.5910 and resistance at $0.60. The Third Major Resistance Level sits at $0.7479.

Failure to move through the pivot would bring the First Major Support Level at $0.3467 into play.

Barring another extended sell-off throughout the day, XRP should avoid sub-$0.30. The Second Major Support Level sits at $0.2778.

XRP remains under pressure ahead of Friday's court date.
XRPUSD 120522 Hourly Chart.

The EMAs and the 4-hourly candlestick chart (below) send a bearish signal. At the time of writing, XRP sits below the 50-day EMA, currently at $0.5351. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also pulled back from the 200-day EMA, XRP negative.

A move through the 50-day EMA would support a return to $0.60.

EMAs send bearish signal for XRP.
XRPUSD 120522 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.