Ripple (XRP), one of the major digital currencies, has been going through a very dark period in recent times. This financial asset, in fact, has recently been delisted from some of the major exchanges worldwide, including the very famous Coinbase, eToro and Binance. Now it's Kraken's turn. What will be the future of one of the cryptocurrencies that, to date, has one of the largest market capitalizations?
Introduction
Since the end of December, when the SEC (Securities and Exchange Commission) sued Ripple for selling unregistered shares, the XRP cryptocurrency has been going through a period to forget. As the days go by, in fact, the most popular exchanges in the world are delisting the famous digital currency from their platforms. What will be the future of this asset at a time when global society seems to be becoming more and more aware of the cryptocurrency industry?
What is Ripple (XRP)?
Ripple (XRP), like many other digital assets, is a cryptocurrency that operates on decentralized platforms and, since its birth in San Francisco in 2013, has achieved a fame almost comparable to that of Bitcoin (BTC). Ripple has also succeeded in this thanks to the network of the same name on which the coins travel, which has been highly appreciated by users.
This, which relies on a payment network and an exchange, works through so-called IOU credits, an element that, within the network, represents the various currencies we know, such as the euro or the dollar. These credits, once they reach the network gateways, undergo an immediate conversion process based on the number of XRPs that are transferred, and are transformed into real money. Although it's a bit complicated to explain with words, this system has guaranteed immediacy, security and large distribution during the years, which is why, already after 4 years of its birth, the asset reached a market cap of as much as $100 billion and, by mid-2020, its market capitalization was second only to Bitcoin.
The origin of the scandal
Despite the great security of the asset, Ripple was sued by the SEC during December 2020, as it was accused of selling stocks in the wrong way, violating financial market laws. Specifically, the commission specified in its complaint that all XRP sales made over the years were never recorded.
This, in their view, constitutes an illegal sale of equity securities. In addition, it has been alleged, again according to the SEC, that company owners Larsen and Garlinghouse "favored" Ripp in its sales. This is because, over the years, the two entrepreneurs sold 1.7 billion and 321 million XRP respectively.
The episode, then, turned into a drastic rise in the asset by more than 50% in just one week. What's more, the coin was delisted from some globally famous exchanges such as Coinbase, eToro, and Binance, preventing users from making certain transactions.
The halt of Ripple by Kraken
After being delisted from major exchanges, Kraken is also moving to put an end to XRP trading within its exchange. In particular, it will affect US users who, from January 29 at 5pm, will no longer be able to make any kind of operation.
The exchange's owners also stressed that those who have open positions will have to meet any margin obligations by January 28. Otherwise, they suggest liquidating all funds immediately so as not to lose considerable amounts of money. The only transactions allowed will be deposit, withdrawal and HODLING for those from the U.S. All users outside of this market will be able to convert, open and close positions without any problems.
However, the exchange's developers have stressed that following new updates from the SEC, they too will move accordingly.
Conclusions
The case of Ripple (XRP) certainly makes us understand how, despite the fame and market capitalization of a digital currency, it can collapse in no time at all, even undergoing complaints from an important body such as the SEC. Witnessing such episodes makes one think a lot, and is a cue to understand how investment in financial assets can be profitable, but at the same time dangerous. Moreover, similar cases affirm for the umpteenth time the truth of the phrase "never invest more than you are willing to lose". In fact, an asset like Ripple that, over the years, has managed to grow the portfolio of millions of users thanks to its huge sudden rises, has been able to make as many people lose important capital. Our advice, as usual, is to keep updated as much as possible on market trends.
*This article was translated manually and with translator software from my original post on theledger.it, so I'll attach the link to my article here
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Discover more
- https://theledger.it/approfondimenti/bitcoin-dalle-origini-ai-giorni-nostri/
- https://theledger.it/approfondimenti/ethereum-storia-ed-evoluzione/
Bibliography
- https://www.theblockcrypto.com/linked/91525/kraken-xrp-trading-halt-us-customers
- https://www.theblockcrypto.com/linked/91525/kraken-xrp-trading-halt-us-customers
- https://it.cointelegraph.com/news/sec-vs-ripple-a-predictable-but-undesirable-development
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