The value of one of the world's most valuable cryptocurrencies is plummeting, and a recent SEC complaint is at the root of its free fall. According to CoinMarketCap, the value of the XRP token has declined more than 42% in the past 24 hours and declined more than 63% from its 30-day high of $ 0.76. It's now just $ 0.27.
XRP's price volatility has rivaled the most capricious cryptocurrency. Since hitting an all-time high of $ 3.84 in January 2018, the coin has spent much of the past two years getting closer and closer to pennies. Last month, XRP saw its biggest rally in years due to major rallies in other cryptocurrencies, but those gains were all canceled out this week by Ripple CEO Brad Garlinghouse admitted that the SEC was planning to file a full-blown lawsuit against the company in the final days of ongoing administration.
The SEC's basic argument is that XRP has always been a security and should have been registered with the Commission from the start more than seven years ago. The SEC claims that the defendants in the case – namely Ripple, CEO Bran Garlinghouse and Executive Chairman Chris Larsen – generated more than $ 1.38 billion from the sale of the XRP token.
Ripple was recently valued at $ 10 billion after a $ 200 million round of funding. Ripple and the XRP token are technically separate, but Ripple retains a significant portion of the currency's market capitalization. At one point, the XRP token was itself being referred to as "Ripple" and shared a logo with the company.
In the company's view, XRP is not a security but a tool for financial institutions, although the volatility of the coin has deterred banks from actually taking over the token. In the meantime, XRP has a presence on a number of cryptocurrency exchanges, which could expand the scope of this legal complaint and affect more players in the room.
In a blog post published yesterday, shortly after the SEC filed the lawsuit, Garlinghouse wrote that the SEC's allegations were "totally false about facts and law" and that the company was "confident" they were "Ultimately, fact finders would prevail in front of a neutral party."