$2B to $125M. Ripple Victory? ✌️
Ripple fined $125M, CEO calls it a victory against SEC. Binance's biggest trading day - $1.2B inflows. Bank of Japan's interest rates u-turn. Telegram to onboard 1B on crypto? Robinhood rides crypto.
Hello, y'all. The music might have gone quite in the markets, but you can still play 👇
Ripple vs US Securities and Exchanges Commission (SEC) has lasted two bull cycles.
Started in 2020.
Now reached a conclusion. Hopefully.
End of a four-year legal battle.
What happened?
The judge realised Ripple did wrong, but not that wrong.
So, they slapped 'em with a $125 million fine.
To be payed in 30 days.
Down from $2 billion demanded by the SEC
Super discount.
Let’s go FLASHBACK!
SEC Accusation? Unregistered sales of XRP tokens, classifying XRP as a security.
Ripple's Defense? Ripple Labs contends that XRP does not meet the legal definition of an investment contract, as no such contract was established with investors.
Ripple argues that XRP is a virtual asset beyond the SEC's jurisdiction.
December 2020
Dec 21: SEC files lawsuit against Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen, accusing them of conducting an unregistered securities offering by selling XRP.
Dec 28: Coinbase delists XRP from its platform due to the SEC lawsuit.
March 2021
Mar 3: Larsen and Garlinghouse argue the SEC failed to provide fair notice about XRP's classification as a security.
Mar 8: SEC requests an immediate hearing to address the fair notice issue.
Mar 22: Judge rules XRP has currency value and utility, differentiating it from Bitcoin and Ether.
July 2023
Jul 13: A court ruling by the Judge Analisa Torres finds XRP is not a security when sold on exchanges, but is when sold to institutional investors.
October 2023
SEC drops charges against Garlinghouse and Larsen but continues seeking remedies from Ripple's purported sale of unregistered securities.
May 2024
May 6-8: SEC files reply brief under seal, followed by a meeting to discuss redactions. A redacted public version is then filed.
August 2024
August 8, 2024: The court ordered Ripple to pay a civil penalty of $125 million after the SEC's motion for remedies was granted in part.
The judge's decision? Ripple was indeed liable for selling XRP as an unregistered security in certain instances.
The company escaped the SEC's initial demand for a much larger penalty.
Ripple's response? Ripple's CEO, Brad Garlinghouse claims the ruling is a win for Ripple, the crypto industry, and the rule of law. And that the SEC's broader attack on the XRP community has failed.
$125 Million. Sound like a loss?
Well it's not.
Why? Court reduced the SEC’s proposed penalty by 94%, which was $2 billion.
Ripple chief legal officer Stuart Alderoty.
XRP reacts
Went all the way up to 25% after the news.
The crypto community reacts
What happens to the HODLers?
XRP is not a security for retail Investors: The court ruled that XRP is not a security when sold to retail investors on exchanges and other platforms. Major win for XRP holders who bought the token this way, as it means Ripple did not violate securities laws in those transactions.
XRP is a security for institutional investors: The court determined that XRP is a security when sold to institutional investors under written contracts.
Implications for XRP Holders?
XRP holders who bought on exchanges are not considered to have purchased unregistered securities, bolstering their legal position.
Harder for plaintiffs to allege XRP holders bought unregistered securities in class action lawsuits, as the court ruled investors' expectations matter.
The ruling casts doubt on the premise that there is a single, objective answer to whether XRP is a security under the Howey test, as the judge found it depends on the type of investor.
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In The Numbers 🔢
$1.2 billion
Binance inflows on August 5.
One of their biggest trading days of 2024.
The recent market meltdown had everyone sweating, but Binance came out smelling like roses.
The positive trend wasn't limited to Binance.
Other major exchanges like Bybit, Crypto.com, and OKX also reported significant increases in net inflows. A broader investor response to the market volatility.
The crash triggered a surge in trading activity.
According to K33 Research, cryptocurrency exchanges processed over $15 billion worth of Bitcoin in spot trading volume on August 5th, marking the highest level since 2022-2023's zero-fee period on Binance.
Bank Of Japan’s U-turn On Interest Rates
Bitcoin and other crypto got a much-needed shot in the arm
Thanks to a recent announcement from the Bank of Japan (BOJ).
The central bank signalled that it's unlikely to raise interest rates again this year.
The move calmed jittery markets.
Read: Carry Trade Crash? 💥
The central bank's bold strategy? Make a big announcement, watch the markets tank, then sheepishly backtrack while mumbling something about 'neutral rates' and 'sustainable growth.'
Deputy Governor Shinichi Uchida said.
“Japan’s economy is not in a situation where the bank may fall behind the curve if it does not raise the policy interest rate at a certain pace.
I believe that the Bank needs to maintain monetary easing with the current policy interest rate for the time being, with developments in financial and capital markets at home and abroad being extremely volatile."
Is this good news? Not entirely.
The BOJ's decision to backtrack on its previous interest rate policy is causing market instability and uncertainty.
The Nikkei is plunging in response to the BOJ's actions, indicating a lack of confidence in the central bank's decision-making.
Block That Quote 🎙️
CEO of X10 hybrid crypto exchange, Ruslan Fakhrutdinov
“Telegram is currently one of the hottest platforms in the crypto world. With one billion users and the lowest user acquisition cost, it can quickly and affordably onboard new users into crypto.”
950 million monthly active users as of July 2024.
The app has been downloaded over 1.3 billion times to date.
Aims to reach 1 billion users by the end of 2024.
With its massive user base, the messaging app is seen as the perfect launchpad for crypto trading.
X10 is leading the charge with plans to develop a Telegram-based crypto trading app designed for simplicity and ease of use.
The app will focus on a user-friendly interface to attract new investors.
“As we aim for one billion users in crypto adoption, it makes sense to reserve the more complex trading platforms for the seasoned crypto audience. Meanwhile, the general audience may find greater benefits within this familiar ecosystem.”
Justin Hyun from Ton Foundation shares the vision of Telegram as a catalyst for mass crypto adoption.
Robinhood Is Cashing In On Crypto?
What do we know?
Total net revenues increased 40% year-over-year to $682 million.
Crypto revenue surge: Robinhood's crypto revenue jumped 161% year-over-year to $81 million in Q2.
Trading volume boost: Crypto trading volume increased by 137% compared to Q2 2023, reaching $21.5 billion.
User decline: Despite increased volume, Robinhood saw a 27% drop in total customer trades and an 18% fall in average trading volume per user due to falling crypto prices.
Crypto outperforms equities: Crypto revenue surpassed equity revenue, generating more than double the income.
Crypto assets under custody: Robinhood holds $20.6 billion in crypto assets, a 57% year-over-year increase.
Bitstamp acquisition: Robinhood aims to acquire crypto exchange Bitstamp to expand its global reach.
The Surfer 🏄
Metaplanet secured a 1 billion yen ($6.8 million) loan from shareholder MMXX Ventures to purchase more Bitcoin. The loan has a low interest rate of 0.1% per annum and a six-month repayment term starting August 8.
Minnesota Governor Tim Walz accepted and later returned a $4,000 donation from FTX exec Nishad Singh shortly before FTX's collapse in 2022.
A New York judge has approved a $12.7 billion settlement between FTX, Alameda Research, and the CFTC. The settlement will allow FTX to pay back creditors, with $8.7 billion allocated for defrauded investors and an additional $4 billion to be disgorged.
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So long. OKAY? ✋
Robinhood’s crypto revenue surged 161%, yet their users dropped 27%. So, is the secret to making money just losing customers faster?
Wow, Ripple really knows how to negotiate a discount! 94% off? I need their lawyers next time I’m haggling over my cable bill. 😅