The long-awaited final hearing in the lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs took place on January 28, 2024, with both parties presenting their closing arguments before Judge Analisa Torres.
The SEC accused Ripple of violating federal securities laws by selling XRP, its native cryptocurrency, to investors without registering it as a security. The SEC claimed that XRP was an investment contract that gave buyers an expectation of profits based on Ripple’s efforts to develop and promote the XRP ledger, a decentralized network for cross-border payments.
Ripple denied the allegations and argued that XRP was not a security, but a digital asset that served as a medium of exchange and a utility token. Ripple also contended that the SEC lacked jurisdiction and authority to regulate XRP, which was not offered or sold in the U.S., but in foreign markets. Ripple further asserted that the SEC’s lawsuit was arbitrary, capricious and contrary to the public interest, as it created uncertainty and confusion in the crypto industry and harmed millions of XRP holders.
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The final hearing lasted for more than three hours, with both sides reiterating their main points and rebutting each other’s arguments. Judge Torres listened attentively and asked several questions to clarify the issues. She did not indicate when she would issue her ruling but said she would do so as soon as possible.
The outcome of the case could have significant implications for the future of crypto regulation in the U.S., as well as for the fate of Ripple and XRP. If the SEC prevails, Ripple could face hefty fines and penalties, and XRP could be delisted from major exchanges and lose most of its value. If Ripple wins, it could set a precedent for other crypto projects facing similar scrutiny from the SEC, and boost XRP’s adoption and price.
Bitcoin ETFs see net outflows for four straight days.
Bitcoin exchange-traded funds (ETFs) have experienced net outflows for four consecutive days, according to data from ETF.com. This indicates that some investors are losing confidence in the cryptocurrency’s rally and are taking profits off the table.
Bitcoin ETFs are funds that track the price of bitcoin and trade on traditional stock exchanges. They offer investors exposure to the digital asset without having to buy or store it directly. Bitcoin ETFs have been in high demand since they launched in the US in October 2021, attracting billions of dollars in inflows and boosting the liquidity and legitimacy of the crypto market.
However, the recent outflows suggest that some investors are cashing out after bitcoin hit a new all-time high of over $69,000 in November 2021. According to ETF.com, the largest bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO), saw net outflows of $113 million on January 25, 2024, followed by $71 million on January 26, $54 million on January 27, and $28 million on January 28. The total net outflows for the four-day period amounted to $266 million, or about 7% of the fund’s assets under management.
The outflows coincided with a drop in bitcoin’s price, which fell from around $40,000 on January 21 to below $39,000 on January 23, a decline of over 13%. Some analysts attributed the sell-off to regulatory uncertainty, as the US Securities and Exchange Commission (SEC) announced that it would review the approvals of bitcoin futures ETFs and consider whether they should be allowed to continue operating.
The SEC’s move raised concerns that bitcoin ETFs could face stricter rules or even be delisted, which could hurt investor sentiment and demand. The SEC also warned that bitcoin ETFs may not provide investors with adequate protection from fraud, manipulation, and operational risks.
Despite the outflows and the price drop, some experts remain bullish on bitcoin and its ETFs in the long term. They argue that bitcoin ETFs provide a convenient and accessible way for investors to gain exposure to the crypto space, and that they will attract more institutional and retail investors as the market matures and stabilizes. They also point out that bitcoin’s fundamentals are still strong, as it has a limited supply, a growing adoption, and a resilient network.
Bitcoin ETFs may face some volatility and challenges in the short term, but they are likely to recover and grow in the long term, as they reflect the increasing interest and innovation in the crypto industry.