As expected, the SEC lawsuit against XRP is already doing damage to XRP holders despite being far from resolution.
Ever since the ICO craze of 2017, popular cryptocurrency exchanges have had to avoid tokens that could potentially be labelled as securities.
Logically or not, the availability of a token on exchanges such as Binance and Coinbase has been a major factor in price discovery. The very potential of a token to be labelled as a security is enough for an avalanche of delistings, each of which is likely to destroy the token value.
XRP price first tanked from more than $0.64 per coin to $0.30 when the news about the SEC lawsuit became public. Now, it does appear that its potential delisting was not priced in, as the Coinbase news caused a further drop down to $0.24 within minutes, and at the time of writing it XRP is still dropping in price – currently standing below $0.22.
Thus, less than two years after its listing on the US-based exchange, XRP will once again become unavailable for purchase to Coinbase clients on January 19, 2021, at 1 p.m. ET. Users will be able to deposit and withdraw XRP after this deadline. Spark tokens will also be airdropped to holders whose funds are on the platform, limiting the financial damage that XRP holders will endure.
As expected, XRP holders are not happy with the fact that their investment lost almost two thirds of its value in the span of a week. Seed investor Roger Ver personally called out the SEC for doing the exact opposite of consumer protection.
The rest of the cryptocurrency community is split on this issue, as the very existence of XRP among coins valuing decentralisation has been polarising for years. Blockstream CEO Adam Back hinted at immoral practices by Ripple to his followers.