Founded in San Francisco in 2012, Ripple is a well-established company offering financial services such as a protocol for secured payments reserved to a global online community. Its founders are seen as pioneers for the cryptoverse.
Ripple provides a decentralized solution different from Bitcoin providing a real-time gross settlement system, currency exchange, and remittance network.
The main fact about Ripple is that it is both a platform and a currency, well yes and no.
Ripple growing, they created the XRP a cryptocurrency for their RippleNet but hold there because there is a difference: Ripple labs is a private company and XRP is a cryptocurrency.
RippleLabs does not control XRP and RippleNet is a network to transfer money that can use XRP to do so.
Thus, as the months passed Ripple grew and in February 2020 they partnered with Azimo — a money transfer company where they managed to move $24 million in a week from the US to Mexico. Richard Ambrose, the CEO of Azimo even said that Ripple saved between 30% and 50 % of transfers from the Philippines and Europe.
And just like that, the XRP became the 3rd largest cryptocurrency in the world at the time and its highest recorded value was more than $3. Everything was great.
Something looked dodgy
- The first hit happened in 2018 with the cryptocurrency crash also known as “the Bitcoin crash and the Great crypto crash” made a number of cryptocurrency’s values crash and the XRP was not spared and went down to 0.25 $
- The mining: you cannot mine XRP and this is a major difference with Bitcoin. BTC and ETH can be mined to create more of them through public ledger but not XRP as it is on a private ledger. To solve that mining and development question Ripple created 100B XRP at once making it impossible for third parties to introduce new coins.
- The distribution model of the 99 billion: here it is 40 billion are currently circulating, 6 billion are owned by Ripple, and 55 billion by an escrow that when all the conditions are filed will release them. The strange part is that these specific conditions are not known therefore it could look like that 50% of the XRP could actually be owned by Ripple?
- The decentralization: only specific validators can take part in the network. Although these validators are banks or institutions like MIT whereas the original aim of the blockchain was the emancipation from these institutions so is it really decentralized?
21st December 2020
On that day the SEC: the Securities and Exchange Commission filed a high-profile enforcement action against Ripple. They claimed that Ripple committed violations of federal securities laws and charged Ripple and two of its executives with conducting unregistered securities offerings. The SEC claimed that XRP is not a currency but a security such as an investment contract and should be ruled by the security laws.
One of their reasons is from the distribution and development of XRP that are both centralized by Ripple giving them full control at the opposite of Bitcoin or even Ethereum where everyone has control and no control at the same time.
The direct consequence of this announcement was on the value of XRP which fell from nearly 25%.
Meanwhile, Ripple always denied XRP to be a security.
Recovery is possible
The price of this lawsuit will be $1,3billions for Ripple and the recovery will definitely be hard if not impossible.
Nevertheless, recovery is possible and Telegram is a good example. Telegram decided to create its own blockchain TON and its token GRAM. On their ICO they raised $1,7billion and they made a specific repartition for these funds: 44% of the GRAM will be for the investors, 52% for the company, and 4% for the development team. The SEC arrived and forbade its sale and asked for immediate reimbursement for the American investors. The blockchain TON was then labeled illegal in the US and nothing could have been done to save it. In May 2020, the Telegram Open Network blockchain is abandoned.
The loss was huge but the project remained alive. The start-up that helped to build the TON blockchain, TON Labs continued their work in open source and released their mainnet in December 2020 under the name Free TON. To differentiate themselves from Telegram they called their token the TON Crystals. Thanks to the community who remained TON Labs and Free TON are both currently on the growth.
Also, Telegram did not close no on the contrary they are still in business and have thousands of companies using their messenger app.
What about now?
22nd of February 2021
Nothing really changed or evolved except that Ripple seems to have found conversations between the SEC and high-up professionals discussions about XRP where clearly they recognize that it isn’t a security giving them a certain advantage for the moment.
The trial is set to last at least a few months but Ripple is getting ready to move their headquarter to Wyoming where they just registered a company. It is important to note that Wyoming is a very crypto-friendly state where the blockchain technology is recognized and has 13 laws enabling it already.
14th of March 2021
Over 6,000 XRP holders have asked to volunteer as third-party defendants in that court case against the SEC. This was filed by John Deaton who built his argument on the fact that the Ripple executives’ actions should have no impact on the XRP’s performances. The SEC’s lawsuit would have made the XRP holders lose $15 billion of investments - explaining why they now ask to be present and involved in the trial.
It is the very same person that started a petition in January on behalf of XRP holders asking that the SEC to distinguish the XRP sales carried out by Ripple executives and the XRP purchases made by individual token holders on secondary exchange markets. They also requested that the funds received from a potential Ripple settlement be sent to a collective trust to cover the loss the lawsuit caused but that request was dismissed by the SEC.
A surprising event happened recently and it is the increase of the XRP value for a worth of $0,50 even if it is far from the highest $3.31 it has been in the past it clearly shows a positive evolution of its market.
What’s next?
Ripple might have to separate themselves from XRP to satisfy the SEC. Even if Ripple were to go down, XRP will continue.
Ever since the beginning of the lawsuit announcement, lots of events happened and filed the news.
It seems to be a game of patience that is being played at the moment, only the next months will tell us Ripple’s fate.
This battle shows that we are still in the early stages of crypto and who knows maybe in a few years we could be talking about Ripple on how promising it was and then just disappear through the SEC’s hammer or how it went back up in a blink of an eye.
