Ripple $1.95 Billion Dilemma: SEC Judgment & XRP Liquidation

The high-profile Ripple case has attracted much attention from cryptocurrency players since the U.S. Securities and Exchange Commission (SEC) recently published its recommended remedies and awards. As part of its complaint, the regulator asked the court to compel Ripple to pay $1,950,768,364 in fines and penalties for breaking federal securities laws by selling XRP coins.

Furthermore, if the court accepts the proposed judgment as the final decision, XRP must settle the $1.95 billion amount within 30 days under the SEC’s requirements. The blockchain corporation may suffer greatly if it doesn’t comply. If Ripple does not file an appeal and the court finds favor of the SEC, the payment company will be under tremendous pressure to fund the required $1.95 billion within the allotted 30-day period.

Ripple Liquidation Dilemma Amid SEC Demands

One potential avenue for Ripple to raise such a substantial sum is liquidating a portion of its substantial XRP holdings, particularly those held in escrow wallets. Data indicates that as of Mar 24, Ripple held over 40 billion XRP (approximately $25 billion at current prices) in these reserved escrow accounts. Given XRP’s prevailing market price of around $0.62, Ripple may need to offload over 3.1 billion XRP tokens to raise the $1.95 billion demanded by the SEC successfully.

However, such a massive sell-off from Ripple’s reserves could trigger a sharp decline in XRP’s price. In the past, observers have noted that Ripple’s relatively small, controlled monthly sales of XRP have impacted the token’s pricing. An emergency liquidation of over 3 billion XRP could exacerbate selling pressure and drive prices down significantly.

It’s also important to remember that this scenario is still theoretical and is based on the court’s ultimate ruling and any future appeal by Ripple. Ripple intends to contest the regulator’s proposed ruling by submitting its opposition to the SEC’s proposal next month. The verdict in the historic case may provide a crucial precedent for how US securities regulations regulate cryptocurrencies.

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risk.