Ripple Reveals Possible Changes in XRP Sale

Ripple has recently made some major changes to its approach to selling XRP to institutions, as unearthed in its latest quarterly report for Q4 2023. This change is regarding the pivotal ruling on July 13, 2023, which declared that XRP is not a security, though certain past sales to institutions were marked to have violated securities provisions.

Even before the July court ruling, Ripple shook up its XRP sales strategy. Now, all sales will match the court’s legal standards. 

The game may have changed with Ripple aligning its sales practices to court standards. 

Before the Trial, Ripple Decodes Its XRP Sale Game Plan

In the report, Ripple highlights a resurgence in spot trading volume for XRP during the Q4, averaging $600 million daily. At the same time XRP underperformed as compared to other major cryptocurrencies like Bitcoin and Ethereum, which saw significant gains, XRP managed to end Q4 2023 with a 19.5% increase.

As per the Q4 report, Ripple altered its approach to selling XRP to institutions before Judge Torres’ ruling. Previously, Ripple sold XRP directly to institutional buyers under written contracts, totaling $729 million worth of XRP, which the court deemed an investment contract. 

Impact of Changed Model in the Case

Under this model, buyers expected Ripple to utilize the capital to enhance XRP’s price, generating profits. Purchasers of XRP now acquire it solely to facilitate quick and low-cost transactions, holding the asset for only a brief period. This short-term usage means buyers do not anticipate making profits directly from the XRP transactions. 

This change in sales strategy suggests that recent or ongoing sales to institutions are not subject to the same securities provisions as past transactions. So, the documents the SEC is asking for during the remedies part of the case might not reveal any evidence that points the finger at Ripple regarding this changed sales strategy. 

If Ripple’s revised sales model is confirmed, it could mitigate any further regulatory penalties or bans on its sales, allowing the firm to continue its current sales operations without disruption.

Is the SEC’s motion to compel now a defunct case?

In response to recent developments in the SEC lawsuit, Ripple is ensuring its XRP sales meet legal standards. The SEC requested Ripple’s financial records to decide on a possible injunction, which could restrict future XRP sales.

Concerns arose among the XRP community about potential restrictions on On-Demand Liquidity (ODL) customers if an injunction is issued. However, Attorney Bill Morgan reassured ODL clients that they could access XRP from alternative sources.

Since the case is in the remedies phase, both the SEC and Ripple will submit remedies-related briefs from March to April 2024, with the court ultimately deciding on appropriate remedies for Ripple’s violations of securities laws.