XRP cryptocurrency jumps as investors hope Ripple will win legal battle with the SEC
A visual representation of the digital cryptocurrency, XRP.
S3studio | Getty Images
The XRP cryptocurrency soared on Wednesday as investors grew hopeful that Ripple, a company closely associated with the token, would win its prolonged legal battle with the U.S. Securities and Exchange Commission.
The token was worth around 45 cents at about 8 a.m. ET, according to data from CoinGecko, up over 11% in the last 24 hours. It was earlier trading up as much as 20%.
Traders pointed to a supplemental notice submitted by Ripple on Monday which pointed to a ruling in a separate case concerning Binance.US’ rescue plan for collapsed crypto lender Voyager Digital. Under the plan, Binance’s U.S. unit was to buy all of Voyager’s assets, including its native VGX token, in a $1.3 billion deal.
The SEC rejected the plan, arguing VGX was akin to a security and calling Binance an unregistered securities exchange, according to the notice from Ripple.
However, the judge rejected the SEC’s objections and approved the bankruptcy plan citing what he called the “vagueness” of the regulator’s arguments and stating the SEC had not “offered any guidance at all as to just what it was that the Debtors allegedly were supposed to prove” to demonstrate VGX was not a security, according to the Ripple letter.
The SEC wasn’t immediately available for comment when contacted by CNBC.
The SEC accuses Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen of breaching U.S. securities laws by selling XRP without first registering it with the regulator. Ripple contests the SEC’s allegations, maintaining the view that XRP should be considered a digital currency rather than a security.
Monica Long, president of Ripple, told CNBC Wednesday morning that she was “very hopeful” about achieving a positive resolution to the SEC battle, adding she thinks it will reach a conclusion sometime this year.
Long said she thinks it’s “very unlikely” the judge will rule in favor of the SEC “considering by our view both the facts and the law are on our side.”
If XRP were to be deemed a security, it could have huge ramifications for the digital currency industry.
Floods of tokens may end up falling into the same category, making them regulated financial instruments that would need SEC supervision and frequent transparency disclosures.
Market sentiment improving
Ripple and the SEC have now both submitted their final round of briefs seeking a summary judgment to the case. The case now rests with Judge Analisa Torres of the Southern District of New York, who is expected to issue a verdict soon.
It is not clear when she will make her decision. However, some crypto investors believe an outcome will arrive in the coming days.
XRP “is being bolstered by a potential positive outcome in the SEC case,” Vijay Ayyar, vice president of international at crpyto exchange Luno, told CNBC via email Wednesday.
The token, which is the sixth-largest globally by market value, is also being boosted by the broader crypto market sentiment, Ayyar said.
Bitcoin is up 70% since the start of the year and is currently trading above $28,000 for the first time in nine months. Ether, the second-biggest token, has risen 50% year-to-date.
“Overall, crypto markets have rallied in the past week or so, given the anticipation of a pause or slow down in interest rates and the slowdown in inflation,” according to Ayyar.
Regulation by enforcement?
Ripple’s Long said she believed the SEC was regulating through enforcement rather than establishing clear regulations for the sector. Europe is more advanced in its treatment of crypto, she argued, highlighting the bloc’s Markets in Crypto Assets regulation as an example.
“We’re seeing action through enforcement vs. setting clear rules and regulation which is what all of us in the industry desire,” Long said.
“Europe is really emerging as a leader in setting really clear regulations and rules that allow crypto companies and also traditional finance to embrace crypto.”
For its part, the SEC has said it wants all crypto companies and projects to bring their operations into compliance with federal securities laws.
In an interview with CNBC in February after a crackdown on the crypto exchange Kraken, SEC Chair Gary Gensler said, “There’s a handful of tokens that have actually registered. The intermediaries, the storefronts if you wish, the casinos that people are investing in and investing at need to properly comply and disentangle these bundled products.”
“If this field has any chance of survival and success, it’s time-tested rules and laws to protect the investing public.”
In recent weeks, the regulator has taken aim at numerous crypto firms alleging they are engaged in illegal securities offerings.
Stablecoin issuer Paxos said the SEC served it with a notice threatening legal action over claims that BUSD, the native stablecoin of crypto exchange Binance, was a security that should have been registered with the regulator.
The regulator also hit crypto lender Genesis and exchange Gemini with charges alleging a high-yield investment product offered by the two companies should have been treated as a security.
WATCH: Bitcoin at $10,000 — or $250,000? Investors are sharply divided on 2023
Lisa Su, chair and CEO of Advanced Micro Devices, left, and Charles Liang, CEO of Super Micro Computer, speak at the AMD Advancing AI event in San Jose, California, on Dec. 6, 2023.
David Paul Morris | Bloomberg | Getty Images
Super Micro shares slipped 8% in extended trading on Tuesday after the server maker reported slightly less revenue than expected for its fiscal third quarter, even as it gave optimistic revenue guidance.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: $6.65 adjusted, vs. $5.78 expected
- Revenue: $3.85 billion, vs. $3.95 billion expected
The company’s revenue jumped 200% year over year in the quarter, which ended on March 31, according to a statement. That compared with a 103% increase in the previous quarter. Net income came out to $402.5 million, or $6.56 per share, compared with $85.8 million, or $1.53 per share, in the year-ago quarter.
CEO Charles Liang said in the statement that Super Micro is bumping up its fiscal 2024 revenue guidance to $14.7 billion to $15.1 billion from $14.3 billion to $14.7 billion. Analysts surveyed by LSEG had expected $14.60 billion.
Notwithstanding the after-hours move, Super Micro stock is up 205% so far this year, while the S&P 500 stock index has gained 6%.
The company goes up against with legacy IT equipment providers such as Hewlett Packard Enterprise. But last year, investors were keen to bet that Super Micro could become a key provider of servers containing Nvidia graphics processing units for working with artificial intelligence models, pushing up the stock 246%. Liang said in the statement that he expects Super Micro to keep taking market share.
In March, Super Micro took the place of Whirlpool in the S&P 500.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
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