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What is Ripple? What you need to know about XRP as CBDC projects, SEC suit resolution loom

By Nicole Willing

Edited by Jekaterina Drozdovica

10:00, 17 September 2022

Gold ripple on a bright background of business graphics close-up.
What you need to know about XRP as CBDC projects, SEC suit resolution loom Photo: Larina Marina / Shutterstock

The US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs, developer of the Ripple (XRP) cryptocurrency, is moving into its next phase, which observers and investors hope will bring the case a step closer to its conclusion.

The lawsuit, filed in 2020, has weighed on the XRP price. The coin is unavailable for investors in the US. Exchanges delisted it in response to the uncertainty the case has created. The SEC alleges that XRP is a security and has been sold without authorisation. XRP denies the claim.

What is XRP, and how does it work? Here we take a look at the Ripple definition and explore what the Ripple lawsuit means for the cryptocurrency’s future.

What is Ripple?

Ripple Labs is a company founded in 2012 by David Schwartz, Jed McCaleb, Arthur Britto and Chris Larsen to manage the XRP Ledger. The company was previously known as NewCoin and OpenCoin before adopting the name Ripple in 2013. XRP Ledger (XRPL) is a blockchain intended to provide a faster, cheaper, more scalable and sustainable alternative to the Bitcoin chain. 

Yet, what is XRP? XRP is the native Ripple coin that enables transactions on the blockchain.

Transactions on XRPL take 3-5 seconds and cost around $0.0002 to transact. The blockchain can process 1,500 transactions a second and consumes less electricity than Bitcoin.

How does Ripple work?

XRP was created with 100 billion coins, and no more can be produced. According to the XRP website: “The XRPL founders gifted 80 billion XRP, the platform’s native currency, to Ripple. To provide predictability to the XRP supply, Ripple has locked 55 billion XRP (55% of the total possible supply) into a series of escrows using the XRP Ledger itself. The XRPL's transaction processing rules, enforced by the consensus protocol, control the release of the XRP.” As of September 2022, around 44 billion XRP coins remain in escrow.

What is Ripple’s role in the operation of XRP? Ripple Labs is focused on promoting XRP as a way to transfer currencies between countries efficiently, enabling real-world cross-border payment services and microtransactions for financial institutions and individuals.

XRP also has applications in trading. As its website states: “XRP’s low transaction fees, reliability and high-speed enable traders to use the digital asset as high-speed, cost-efficient and reliable collateral across trading venues – seizing arbitrage opportunities, servicing margin calls and managing general trading inventory in real time.”

Since 2021, Ripple has been working with central banks in several countries on the launch of  central bank digital currencies (CBDCs) on the XRP Ledger, including in Bhutan, Palau and the UK. On 31 August, the Digital Dollar Project announced that its Technical Sandbox Program will start in early October to explore technical implementations of a US CBDC, with Ripple participating along with Digital Asset, EMTECH and Knox Networks.

Ripple CBDC advisor Antony Welfare hinted in a tweet on 6 September that there will be “more CBDC announcements in the next few weeks”.

Ripple Labs has also developed its On-Demand Liquidity (ODL) product to help banks and other financial institutions that use its RippleNet banking network to offer fast and convenient cross-border, remittance and settlement services. Its latest partners include Travelex Bank in Brazil, FOMO Pay in Singapore and FINCI in Lithuania. 

“On-Demand Liquidity enables RippleNet customers to leverage the digital asset XRP to bridge two currencies in three seconds, ensuring payments are quickly sent and received in local currency on either side of the transaction,” according to the Ripple website.

XRP price history

Ripple coin XRP has had a tumultuous price history, soaring during the 2017 cryptocurrency rally from $0.006 to reach an all-time high of $3.84 on 4 January 2018. The price quickly dropped as the markets crashed, falling to $0.4844 on 30 March 2018 and trading down to $0.1151 in March 2020.

How does Ripple SEC news affect the Ripple coin price? XRP traded up to $0.768 in November 2020, but fell to $0.2276 at the end of the year after the SEC filed its lawsuit. XRP traded below $1 until 2021, when the crypto markets started their next major rally, peaking at $1.96 in April 2021.

XRP to USD price chart, 2013 -2022

Past performance is not a reliable indicator of future results


0.62 Price
-1.880% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168


171.26 Price
-5.630% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652


0.13 Price
-4.650% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872


3,164.83 Price
-6.180% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

XRP dropped to $0.5179 in July 2021 and rebounded to $1.41 in September 2021, but has largely been on a downward trend in the past year. The price dropped to $0.5587 in late January, from $0.85 at the start of 2022, and while it reached $0.9111 in February, XRP began to fall sharply in April. 

The XRP price plummeted to $0.345 on 12 May as crypto markets responded to the collapse of the Terra Luna coins and the US dollar soaring to 20-year highs. XRP has since traded in a $0.31-0.39 range.

Ripple v SEC to make documents public

The SEC filed legal action against Ripple and two of its executives on 22 December 2020, alleging that sales of $1.3bn of XRP to retail investors violated regulations governing the public offerings of securities, based on its view of XRP as a digital asset, or security, rather than a cryptocurrency. The complaint stated:

 “From at least 2013 through the present, Defendants sold over 14.6 billion units of a digital asset security called "XRP," in return for cash or other consideration worth over $1.38 billion U.S. Dollars ("USD"), to fund Ripple's operations and enrich Larsen and Garlinghouse. 
“Defendants undertook this distribution without registering their offers and sales of XRP with the SEC as required by the federal securities laws, and no exemption from this requirement applied.”

What is Ripple’s defence? Ripple Labs responded in its preliminary statement:

 “That theory ignores, among many other things, that XRP performs a number of functions that are distinct from the functions of "securities" as the law has understood that term for decades. For example, XRP functions as a medium of exchange — a virtual currency used today in international and domestic transactions — moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as one.”

In the latest XRP lawsuit update, on 12 September the judge on the case approved a request from both Ripple and the SEC to make portions of their document filings public, as the case will set legal precedent for the regulatory handling of cryptocurrencies. According to the joint scheduling proposal, redacted versions of the briefs will be made public on 19 September. The case is expected to continue into 2023.

Legal expert James Filan tweeted a scheduling update on 6 September, noting that “there are still many disputes that are in the process of being briefed”. Motions for Summary Judgement and Statements of Undisputed Facts were to be filed by 13 September, with responses due to be filed by 18 October. Replies to those responses must be filed by 15 November.

“I am sticking to my prediction that District Judge Torres will decide both the Expert Motions and the Summary Judgement motions at the same time – on or before March 31, 2023,” Filan stated.

XRP was delisted from cryptocurrency exchanges in early 2021 after the SEC filed the lawsuit, including, Coinbase, and OKCoin, as well as cryptocurrency payments provider Wirex and UK banking app Ziglu.

Following the initial response in the XRP price to the lawsuit filing in December 2020, price analysis shows that the coin has largely tracked the direction of the wider cryptocurrency markets led by bitcoin. 

The XRP price fell along with other cryptocurrencies on 12 May, when the TerraUSD and luna coins crashed and sold off further on bearish market sentiment in June. The XRP price dropped from $0.3595 to $0.332 on 13 September as cryptocurrencies and stocks sold off rapidly in response to a higher-than-expected US inflation report.

Ripple’s pros and cons

There are advantages and disadvantages to choosing to invest in the Ripple coin, including:

XRP opportunities:

  • XRP enables fast, low-cost transactions

  • XRP is used by financial institutions around the world to enable cross-border payments

  • Individuals and businesses can use XRP to make secure payments

  • Ripple is working on CBDCs with several countries, including research in the US and UK

XRP risks:

  • Outcome of the SEC lawsuit remains uncertain

  • XRP is not available for trading on several major crypto exchanges, limiting access and liquidity

  • Many of Ripple’s partners use its blockchain services without XRP

  • XRP ownership is concentrated among Ripple’s management

If you are interested in trading XRP, we strongly recommend that you always do your own research. Look at the latest news on XRP and the SEC case as well as market trends, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose


How long has XRP been around?

XRP was launched as an alternative to bitcoin in 2021. The altcoin was designed to offer faster and cheaper blockchain-based transactions.

Why is XRP in a lawsuit with the SEC?

The SEC filed a lawsuit against Ripple Labs in December 2020, claiming that it was unlawfully selling XRP as an unregistered security. Ripple is fighting the claims, maintaining that XRP is a cryptocurrency in the same way as the likes of bitcoin and ether, and not a security.

Is XRP likely to win the lawsuit?

Ripple has received rulings in its favour during the case, such as using statements from SEC officials that contradict the SEC’s claims. However, the final outcome of the case is not certain.


Markets in this article

Ripple / USD
0.61959 USD
-0.01176 -1.880%

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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
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Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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