XRP to be Delisted from Major Exchange Crypto.com, Down 27% in 24 Hours

Ripple’s XRP token has been announced for delisting from major cryptocurrency exchange, Crypto.com, following prior delistings from several other exchanges this week.

“Effective January 19, 2021, at 10 am UTC, XRP will be delisted and trading suspended from the Crypto.com App in the US. Customers based in the US won’t be able to deposit XRP into the Crypto.com App as of January 19th, 10am UTC,” the announcement states.

Following the recent US Securities and Exchange Commission (SEC) lawsuit against the blockchain-based international remittance company Ripple, XRP has been crashing in value. It has lost 27% of its value in just the past 24 hours and over 50% in the past seven days. Some crypto market analysis sites like OnChainFX have even moved XRP out of the top five coins, listing it below Litecoin (LTC) and Chainlink (LINK).  

Although the SEC ruling only applies to US-based investors, which make up a small percentage of XRP’s user base, the effects have been devastating. This is most likely due to Ripple being based in the US and foreign investors fearing that regulators in other countries may impose similar rulings. Following the ruling, Ripple CEO Brad Garlinghouse criticized the SEC for stifling crypto innovation in the US and pouring favor on Bitcoin (BTC) and Ethereum (ETH). 

Why the SEC views XRP as a security

Since 2013, Ripple has raised over $1.38 billion in sales of XRP tokens that were never registered with the SEC. The SEC alleges that this amounts to the illegal sale of unregistered, non-exempt securities under Section 5 of the Securities Act of 1933. Ripple, however, claims XRP is not a security and should therefore be exempt from the rules. 

In a new lawsuit filed by the Southern District of New York on December 22, 2020, the SEC specifically names Ripple CEOs Chris Larsen and Garlinghouse for aiding and abetting the sales of XRP tokens. Due to their highly decentralized nature, other cryptocurrencies like Bitcoin and Ethereum are not viewed as securities by the SEC.

“The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception. Applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value,” said SEC Corporate Finance Director Bill Hinman in 2018.

The ruling doesn’t necessarily mean the end of Ripple, as the company has recently been moving away from XPR as a means of liquidity for their operations. Many of Ripple’s most widely used products, like xCurrent, no longer require the use of XRP to facilitate cross-border payments. Whether or not XRP can survive the blow remains to be seen, as the token may become largely unusable if unlisted from all major exchanges.