The SEC’s lawsuit against Ripple (XRP) has revealed some juicy details. The SEC wants to prove that Ripple’s main source of income is XRP sales to institutional investors. Investors beware!
Just yesterday, we reported on the start of the second round in the mammoth SEC proceedings against Ripple (XRP), including partially redacted court documents. Now the financial blog Wall Street Bulls on X has gone to the trouble of resolving some of the redactions. This was possible because the SEC provided detailed source information on Ripple’s annual reports in its request. For XRP investors, the SEC’s comments are relevant because they shed a sobering light on Ripple’s business concept.
It revolves around XRP sales by Ripple to institutional investors – the issue on which the court is now to rule. The SEC considers these sales to be illegal anyway. Until now, observers had assumed that the court would investigate XRP sales that took place a long time ago. However, as we also noted yesterday, the SEC is also insisting that Ripple sell XRP on a large scale to institutional investors again after the first court ruling in the summer of 2023. But this is exactly where the figures were blacked out.
Wall Street Bulls has now deciphered them and we take away some key messages:
1. according to the SEC’s account, Ripple has made six times more money from the XRP sales in question since the first court ruling than in the six years prior to the 2020 lawsuit.
2. 1.2 billion US dollars are said to have been raised by Ripple from institutional investors for XRP between 2021 and 2023 – 800 million of which in the second half of 2023 alone, i.e. after the first judgment.
3. The SEC, citing official Ripple figures, shows that XRP sales to institutional investors account for the lion’s share of total revenue for the crypto company.
4. according to the SEC, this high Ripple dependence on XRP sales proves that laws are constantly being violated and that XRP is used for profit.
Taking these statements as valid, there are at least two sticking points for private XRP investors:
– For Ripple, the second round in court against the SEC could again be a test of nerves, with demanded fines in the billions of dollars looming. This would not leave XRP’s price curve cold.
– More importantly, contrary to what Ripple likes to claim, XRP has hardly any measurable distribution in its advertised purpose as a “digital bridge currency”. An investigative report by Forbes in April 2023 had already cast doubt on the purpose of XRP and suspected insider trading.
Conclusion: Is Ripple on the defensive against the SEC with XRP?
It is striking that Ripple’s otherwise so often talkative management has not commented on the “redactions” made by Wall Street Bulls. The redactions are likely to have been made at Ripple’s request and if incorrect figures for XRP are now appearing there, a clarification would be logical. Meanwhile, XRP’s price curve is currently unable to defend its gains from July 2023 – despite the Bitcoin rally. That was the month when Ripple temporarily spread optimism for XRP again with the first ruling in the SEC proceedings behind it.
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