XRP Slumps 11% After SEC Appeals Court Ruling Viewed as Favorable to Ripple

(Bloomberg) -- XRP, the cryptocurrency that has been the focal-point of a long running legal battle between its issuer and the SEC, slumped as much as 11%

The price of XRP, a cryptocurrency that has been at the center of a legal battle between its issuer and the SEC, fell as much as 11% on Thursday after the agency appealed an earlier court ruling that was seen as favorable for the company.

The SEC sued Ripple Labs Inc in 2020, alleging that the San Francisco-based company broke the law when it raised money by selling the digital token without registering it as a security. Last year, US District Judge Analisa Torres ruled that XRP was only covered by securities law when sold to institutional investors, a decision that was hailed as a major victory for the industry.

On Wednesday, the SEC filed an appeal of the court decision, which also ordered Ripple to pay a $125 million civil penalty for improperly selling XRP, a fraction of the $2 billion the regulator had sought.

The appeal came a day after Bitwise Asset Management Inc became the first to file with the SEC for an exchange traded fund that would invest directly in XRP, the world’s seventh-largest digital token.

“There was anticipation that the XRP ETFs were gonna happen and a lot of traders were positioning ahead of the event,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “A lot of long positions on XRP in the futures market got wiped out in the past 24 hours. People are kind of unwinding their positions now.”

XRP fell as low as 51 cents on Thursday, before recently trading at about 52 cents. It has slumped almost 20% over the past four trading sessions. The token has a market value of roughly $29 billion, according to data compiled by CoinMarketCap.

--With assistance from Isabelle Lee and Chris Dolmetsch.