Leading cryptocurrency startup Ripple has become the target of a massive $1.95 billion in fines and penalties demanded by the U.S. SEC, making headlines. The SEC’s recent filing outlining this demand has generated a great deal of attention and conjecture in the cryptocurrency world.
Evaluating Ripple’s Possible Approach to Avoid $2 Billion Fine
The SEC is demanding that Ripple pay a substantial amount of $1,950,768,364 within 30 days of the court’s final ruling in its proposed judgment. If the SEC wins in court and Ripple decides not to file an appeal, the business will have to raise this enormous sum of money quickly.
Given the impending large penalties, Ripple may look into other options to satisfy the SEC’s requirements. Using its XRP holdings, especially the XRP coins kept in escrow accounts, is one alternative. By December 2023, Ripple had accumulated a sizeable 45.77 billion XRP reserve in escrow.
Is a Buy-Off Approaching?
It all relies on whether Ripple chooses to sell 3.12 billion XRP tokens from its escrow reserves in order to raise the $1.95 billion fee. This is equivalent to about 7% of all XRP coins held in escrow and might have a big impact on the dynamics of the cryptocurrency market.
But there isn’t another option to pay this large sum in such a short period of time. The SEC’s request for a final judgment, which seeks a sizable fine against Ripple for alleged violations of federal securities laws connected to its institutional transactions, was notably mentioned by legal analyst Jeremy Hogan. He contends that if the court grants the SEC’s request, Ripple would be compelled to sell huge quantities of XRP, which would have a negative effect on retail investors and cause XRP’s value to significantly decline.
Handling the Impact of XRP
Selling XRP carries dangers for Ripple and the larger cryptocurrency market, even though it might be a way to comply with the SEC’s requirements. Large-scale XRP dumps may cause price changes and erode investor trust, which may result in a market meltdown.
It’s critical to acknowledge that the Ripple-SEC legal dispute has an unclear outcome. In court, Ripple may challenge the SEC’s demands, and the outcome may be different from what the SEC originally suggested.
The cryptocurrency community is waiting for more information regarding the outcome of this very consequential legal fight as Ripple gets ready to submit its opposition to the SEC’s proposal. The case’s outcome will probably have a significant impact on investors in XRP, Ripple, and the larger cryptocurrency market.