MARKETREGULATION

Regulatory ferment, top market makers exit, Bitwise sells all XRP, research institution: Ripple is dead

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Regulatory ferment, top market makers exit, Bitwise sells all XRP, research institution: Ripple is dead

The U.S. Securities and Exchange Commission (SEC) announced on the 23rd that it has filed a lawsuit against Ripple and two of its executives, accusing them of selling $1.3 billion worth of unregistered securities. As a result, the price of Ripple's XRP has dropped by over 50%, and the ripple effects are beginning to unfold. Large institutions have announced they will stop market-making for XRP, and some trading platforms have also announced they will cease trading XRP.

Institutions Exiting XRP Market

Jump Trading, Galaxy Digital

Jump Trading, a top high-frequency trading team in the traditional financial market, and Galaxy Digital, a renowned crypto investment firm and a large market maker, have reportedly exited the XRP market. Jump Trading claims to no longer provide liquidity for XRP, while Galaxy Digital has halted trading and will evaluate based on future developments.

Bitwise Crypto Index Fund Removes XRP

Bitwise, a crypto asset management company, has liquidated its XRP position from its 10 Crypto Index Fund, where XRP accounted for 3.8% of the fund. According to theannouncement, Bitwise made this decision based on the SEC's public lawsuit, stating that the fund will not invest in assets that may be considered securities under federal or state securities laws, and the funds from liquidating XRP will be reinvested in other assets.

OSL, CrossTower, Beaxy Delist

CrossTower and Beaxy exchanges in the U.S., along with the first exchange to delist XRP, OSL in Hong Kong, have all temporarily halted trading with normal withdrawals. They have stated that they will resume normal trading after XRP is determined not to be a security.

SEC Chairman Submits Resignation

Previously reported, SEC Chairman Jay Clayton announced his resignation by the end of the year, and according to apublic statement released on the night of the 23rd, yesterday was his last day in office. Clayton's last-minute lawsuit against Ripple before stepping down has drawn criticism from former SEC commissioner Joseph Grundfest, whostated:

This lawsuit is unprecedented, with changes in SEC leadership and the U.S. government imminent, and future government authorities and Congress may have completely different views on regulation. There is no urgent reason to enforce immediately, causing significant harm to innocent XRP holders.

The End of an Era?

A high-ranking executive in the crypto field commented on large institutions ceasing market-making for XRP:

Assuming there is not enough liquidity in the XRP trading market, spreads will gradually widen, making it more difficult for investors to conduct large transactions.

As the Ripple saga unfolds, many key opinion leaders (KOLs) who were previously critical of XRP have intensified their criticisms. Ryan Selkis, the founder of Messari who previously called XRP and XLM trash, has declared the death of XRP:

I've read the lawsuit three times, XRP holders are completely finished. I expect it to be around $0.1 by mid-January. Although I believe XRP will eventually be removed from the securities category, it will be a tough battle. Its "On-Demand Liquidity" (ODL), market makers, and sales plans are all gone. Institutions will ultimately adopt Bitcoin and stablecoins, as XRP is inherently inferior to both. With the largest lawsuit of the year, it's all over.

However, influential figures have come forward to defend Ripple. Samson Mow, the Chief Strategy Officer of Blockstream, stated:

Of course, all banks that rely on XRP for cross-border transactions, such as Bank of America, Standard Chartered, Santander, Cathay, MoneyNetint, and NIUM, will immediately defend Ripple.

However, a quote from the SEC's lawsuit was quickly cited below the tweet: "There are no banks, and only 15 companies have signed agreements with Ripple that may use its ODL services, most of which are sponsored by Ripple itself."

Samson Mow also replied with an agreeing animated GIF, indicating that he was merely mocking Ripple's lack of utility.