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Five Things to Know in Crypto This Week: SEC vs. Ripple, Coinbase, and Robinhood

By:
Bob Mason
Updated: May 11, 2024, 05:09 GMT+00:00

Key Points:

  • In the week ending May 10, the US BTC-spot ETF market ended a four-week run of weekly outflows.
  • Filings in the SEC vs. Ripple case garnered investor interest amidst intensifying SEC activity, including a response to the Coinbase motion for interlocutory appeal.
  • Cryptos joined the race to the White House, with Republican Party front-runner and former President Trump plugging cryptos.
Five Things to Know in Crypto This Week

In this article:

BTC-Spot ETF Market Ended a Four-Week Run of Outflows

BTC needs a weekend rally to avoid a seventh weekly loss in nine weeks.

From Monday (May 6) to Saturday (May 11), BTC was down 4.84% to $60,905. Despite the pullback, BTC avoided sub-$60,000 going into the weekend.

US BTC-spot ETF market flow trends for the week ending May 10 pressured buyer demand for BTC.

The US BTC-spot ETF market saw total net inflows of $139.4 million in the week ending May 10. In the week ending May 3, the US BTC-spot ETF market saw total net outflows of $433.0 million. While ending a four-week run of net outflows, inflows were lackluster.

According to Farside Investors,

  • Grayscale Bitcoin Trust (GBTC) reported total net outflows of $171.1 million, compared with outflows of $277.2 million in the week ending May 3.
  • Fidelity Wise Origin Bitcoin Fund (FBTC) saw total net inflows of $111.3 million in the week ending May 10. In the previous week, FBTC reported total net outflows of $130.7 million.
  • ARK 21Shares Bitcoin ETF (ARKB) saw total net inflows of $82.8 million after net outflows of $84.4 million in the week prior.
  • iShares Bitcoin Trust (IBIT) ranked third in the week ending May 10, with total net inflows of $48.1 million. In the previous week, IBIT reported net outflows of $24.2 million.

Uncertainty about the Fed interest rate trajectory impacted buyer appetite for BTC-spot ETFs and BTC. Furthermore, SEC moves against US crypto firms also pressured buyer demand.

BTC faces a weekly loss.
BTC Weekly Chart 110524

SEC vs. Ripple: The SEC Reply Brief Tested Investor Optimism

SEC vs. Ripple case-related updates warranted investor attention on Tuesday (May 7). The SEC filed a redacted version of its remedies reply brief.

The reply brief was in response to the Ripple remedies opposition brief. Significantly, the SEC continued pursuing a punitive disgorgement and injunction for Ripple breaching US securities laws.

The SEC targeted post-complaint activity, arguing Ripple breached securities laws after the 2020 complaint through ODL institutional sales. Notably, the SEC also focused on Ripple’s plans to launch a stablecoin, stating it would be an unregistered security and in breach of US securities laws.

After procedural filings through the remainder of May, the courts will decide the penalty Ripple must pay for breaching US securities laws. A court injunction prohibiting XRP sales to institutional investors may materially impact Ripple’s expansion plans in the US.

The outcome will have significance for Ripple and XRP. However, SEC plans to appeal against the Programmatic Sales of XRP ruling could have ramifications for the broader crypto market. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

If the SEC successfully appeals the ruling, the SEC could intensify its scrutiny of the US digital asset space.

XRP price action reflected the uncertain future. From Monday (May 6) to Saturday (May 11), XRP was down 5.13% to $0.5033.

XRP under pressure.
XRP Weekly Chart 110524

SEC Targetted Robinhood Crypto Trading with a Wells Notice

On Monday (May 6), news hit the wires of Robinhood (HOOD) Crypto (RHC) receiving a Wells Notice. The Wells Notice advised Robinhood Markets Inc.,

“It made a preliminary determination to recommend that the SEC file an enforcement action against RHC for alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended.”

The crypto market reacted to the news, with Coinbase (COIN) CEO Brian Armstrong saying,

“Welcome to the club – you’re in good company :). The courts will help get clarity – but the right solution longer term is we need to elect pro-crypto candidates. This is why Coinbase has supported Fairshake superpac, and StandWithCrypto.org.”

A surge in crypto revenue through the first quarter could not limit the impact of the news on the share price. Robinhood slid by 9.58% to $16.23 in the week ending May 10. In contrast, the Nasdaq Composite Index ended the week up 1.14%

Robinhood slides amidst SEC scrutiny.
HOOD Weekly Chart 110524

Republican Party Front-Runner and Former President Trump Plugged Cryptos

This week, Republican Party front-runner and former US President Donald Trump voiced his support for crypto, saying,

“If you ask Biden, Sir are you for or against crypto? What’s that? What? Get me off the stage. He’s saying get me off the stage. No, he has no idea. But look, Gensler is very much against it, the Democrats are very much against it and I say this, a lot of people are very much for it.”

Trump went on to say,

“I’m fine with it. I want to make sure it’s good and solid and everything else. But I’m good with it. And if you like crypto in any form, and it comes in a lot of different forms, if you’re in favor of crypto you better vote for Trump.”

The crypto community views a Republican Party victory as a boon for the US digital asset space. Significantly, a Republican win could pave the way for the Lummis and Gillibrand Responsible Financial Innovation Act through Congress. The Act would give the Commodity Futures Trading Commission (CFTC) authority to regulate the digital asset space.

SEC Opposed the Coinbase Motion for Interlocutory Appeal

Amidst a flurry of SEC activity, the SEC filed its response to the Coinbase motion for interlocutory appeal.

Coinbase Chief Legal Officer Paul Grewal shared the news on X (formerly Twitter), saying,

“In a nightcap to this busy day, the SEC also filed their response to the Third Circuit APA challenge we brought to their refusal to pursue notice-and-comment rulemaking. Their basic response: “no additional explication is required to understand the Commission’s policy decision.”

Grewal added,

“But other than denying any obligation to explain itself, they simply rehash the fallacy that registration as is is “workable.” We are confident the Court will see this for what it is.”

Coinbase filed the motion for interlocutory appeal in response to the court ruling on the Coinbase motion to dismiss (MTD). Judge Katherine Failla surmised,

“The court concludes that because the well-placed allegations of the Complaint plausibly support the SEC’s claim that Coinbase operated as an unregistered intermediary of securities, Defendants’ motion must be denied in large part.”

In the week ending May 10, Coinbase shares tumbled 10% to $200.92.

Coinbase tumbled on SEC activity.
COIN Weekly Chart 110524

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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