2020 was a year of crisis in many ways — just not for large parts of the crypto sector, especially Bitcoin. The signs were also pointing to growth for the Ripple asset XRP. Then the US Securities and Exchange Commission filed a lawsuit against the Californian FinTech. A look back at the eventful year for XRP — of cooperations, innovations, and regulatory thumbscrews.
The rumor mill was already boiling at full speed at the beginning of the year: At the world economic summit in Davos, Ripple CEO Brad Garlinghouse speculated about an increasing number of initial public offerings (IPO) by crypto companies. Garlinghouse made no secret of the fact that the Californian FinTech would like to enter the trading floor itself. Some were already expecting the Ripple IPO for 2020. Wishful thinking, as it turned out.
Contrary to what its name suggests, the National Bank of Egypt is not a central bank, but it is the largest private bank in the country. So it’s no wonder that the XRP rate reacted positively in February to the news that the bank has joined the RippleNet payment network. The National Bank of Egypt hopes the cooperation will bring efficiency benefits for cross-border transfers and the opening up of new markets. As with most Ripple collaborations, XRP does not play a direct role in the endeavor. Nevertheless, as a result of the news, the price rose by over 11 percent and reached a preliminary annual high of 0.31 US dollars.
While the year had started very promisingly for the Ripple Coin, XRP could not escape the Corona Crash on March 12th. Panic selling pushed the price below $ 0.14. The euphoria that arose in February was gone for the time being — and the hard-won 30-cent mark had moved a long way off. It shouldn’t be the only emotional and technical rollercoaster ride for the asset and its holder.
In April, Ripple announced another partner for its RippleNet with the Thai Siam Commercial Bank. Again, it is about the processing of transfers that come from Thai people working abroad. Thailand is one of the countries in which such payment flows make up a not inconsiderable proportion of the gross domestic product. It was not until August 2020 that the amount of money that flowed into the Southeast Asian country in this way reached a record high of over 46 billion euros (17 170 billion THB). The cooperation between Ripple, SBC and the crypto start-up Azimo should enable these transfers to be carried out much faster than via classic clearing systems.
Attempts at fraud are simply part of everyday life in the crypto space. This not only affects investors who were misled by phishing attempts, for example, but also the projects themselves. At the end of April, things got too colorful for Ripple: The company sued the video portal Youtube. The accusation: The platform is doing too little to prevent scam attempts. In advance, Ripple had to distance itself from so-called giveaway scams several times.
At the beginning of May, however, Ripple was also on the other side of the dock. An organization called Bitcoin Manipulation Abatement LLC accused Ripple, among other things, of using XRP to bring an unregistered security to the people of investors. The proceedings are still ongoing. So far, Ripple has only been able to successfully defend a few charges — violations of the California Business and Professions Code. That comes from a verdict from October 2nd. The charge of illegitimate sale of securities still stands.
Of course, as the court ruled in its previous injunction, Plaintiff may also bring his remaining first, second, third, and fifth pleas against Defendants for allegedly selling or offering unregistered securities in violation of federal and California state law.
It was not the first time that this allegation was made against FinTech. And it wasn’t going to be the last.
In August, a message attracted attention that two Ripple investors — including an early investor — wanted to sell their company shares on particularly favorable terms. At the time, there was speculation about a company valuation of ten billion US dollars. Most recently, Ripple completed a private investment round of $ 200 million in December 2019. The two investors should come from the US and China, and its shares at a discount of 35–40 percent offered have.
With XUMM, Ripple has developed its own banking app, which is positioned at the interface between XRP Ledger, companies and global trade. The app supports payment requests, personalized profiles and KYC management functions, among other things. A connection to the Fiat banking system is also planned. In the future, XUMM should offer a veritable alternative to classic online banking. The XRP course shot in August after presentation of the roadmap for XUMM into the air and captured in the meantime the 0.3 US dollars back. A stamp he had last seen in February.
But the Ripple course was able to recover from the summer slump and flirted with the 30 cent mark over and over again throughout August. Positive news such as a growing transaction volume with On-Demand Ledger, the Ripple technology that XRP uses as a bridge currency for cross-border payments, raised hopes in the XRP Army that the asset is on the way to becoming the “standard” of international payments will.
At the same time, Santander Bank, one of the largest and most prestigious Ripple partners, poured water into the wine of the XRP community. In mid-August, the bank, which is one of the largest in Europe, emphasized that it does not use either XRP or ODL. Ripple CEO Garlinghouse saw the lack of regulatory clarity around crypto assets as a main reason for the hesitant or non-existent XRP adaptation by the financial houses. He emphasized his vision to the Financial Times that in two years Ripple would rise to become the “Amazon” of the blockchain world .
After all, it was the regulations, namely those made in the USA, that made Garlinghouse think aloud about emigration in October . The publication of the “Cryptocurrency Enforcement Framework” by the US Department of Justice served as a specific occasion. Instead of creating clarity, according to Garlinghouse, the report at most threw a light on the diffuse situation of crypto regulation in the USA. Above all, the fact that eight US authorities are de facto entrusted with the supervision of crypto assets and companies. Dubai was traded as a possible new headquarters — Ripple opened a regional branch there in November.
From a price point of view, XRP experienced its highlight for 2020 in November: A real price explosion let the Ripple asset finally break out of the long-lasting crab and reach for the stars. In the last week of the month, the XRP price almost tripled and scratched the 90-cent mark. However, the high spirits among XRP investors should soon take a serious blow.
At the end of December, the US securities regulatory authority (SEC) seized the sword of Damocles that has always hung over the Californian FinTech and strikes a potentially fatal blow. Ripple Labs, CEO Garlinghouse and Co-Founder Chris Larsen are accused of violating US securities law. The allegation is based on the interpretation of XRP as a security by the SEC. The sale to small investors — i.e., the ICO of the XRP tokens — should therefore have been registered with the authorities in advance. The XRP course has suffered significant losses since the lawsuit was announced.
There is a risk of falling into the abyss. Brad Garlinghouse has stated that he deliberately decided against an out-of-court settlement — the same applies to co-founder and chairman Chris Larsen. The matter is now being carried out in court — the hearing can possibly drag on for years.
In view of the announced (temporary?) De-listings of XRP exchange pairs on various crypto exchanges (including Coinbase, Bitstamp, Bittrex OKCoin and Crypto.com) — XRP holders have to be prepared for tough times. Ripple boss Garlinghouse has meanwhile emphasized that Ripple will soon publish a replica to the SEC lawsuit, which he understands as an attack on the entire crypto space.
In any case, one thing is certain: 2021 will show whether the current price debacle was the beginning of the end of the banking coin — or a historic opportunity to get into XRP.
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