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Crypto bull markets are often much like rush hour traffic, where everyone wants to get somewhere, but the cars in one lane often pull ahead in a given stretch of road. Right now, two of the faster lanes belong to Ethereum (ETH 2.56%) and XRP (XRP 1.17%). One question that’s bugging investors is which of the pair is more likely to double in value the soonest. Both coins enjoy swelling liquidity and real world adoption, yet bull markets rarely rewards every contestant equally. Let’s examine their prospects.
Source: The Motley Fool
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Critics:
A class action was filed against Ripple in May 2018 “alleging that it led a scheme to raise hundreds of millions of dollars through unregistered sales of its XRP tokens”. According to the complaint, “the company created billions of coins ‘out of thin air’ and then profited by selling them to the public in ‘what is essentially a never-ending initial coin offering’”.
The U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen on December 21, 2020, for allegedly selling unregistered securities. In the lawsuit, the SEC claimed that XRP was a security instead of a commodity, because it was generated and distributed by Ripple Labs in a centralized fashion.
It was not being adopted by financial institutions for its advertised use cases. The SEC stated that Ripple executives sold 14.6 billion units of XRP for more than $1.38 billion to fund the company’s operations and enrich themselves. In response, Garlinghouse criticized the SEC and indicated that Ripple Labs would defend itself in court.
Coinbase delisted XRP on December 28; an investor filed a class action on December 30 alleging that Coinbase sold XRP tokens with the understanding that they were unregistered securities. On April 13, 2021, SEC Commissioner Hester M. Peirce published the Token Safe Harbor Proposal 2.0, which is ″intended to provide Initial Development Teams with a three-year time period within which they can facilitate participation in.
The continued development of, a functional or decentralized network, exempt from the registration provisions of the federal securities laws so long as certain conditions are met.″ Judge Analisa Torres issued a decision on motions for summary judgement on 13 July 2023, and stated the XRP token itself is not a security, although the manner in which it is sold could constitute the sale of a security.
“XRP, as a digital token, is not in and of itself a ‘contract, transaction, or scheme’ that embodies the Howey requirements of an investment contract.” The ruling further found that the institutional sales of XRP tokens constituted the unregistered offer and sale of investment contracts. However programmatic sales and other XRP token sales by Ripple Labs did not constitute the offer and sale of investment contracts, she ruled. The case could subsequently go to a full trial, or be appealed.
For its creation and development of the Ripple protocol (RTXP) and the Ripple payment/exchange network Ripple Labs was named as one of 2014’s 50 Smartest Companies in the February 2014 edition of MIT Technology Review.
A scientific study made by two researchers from Stanford and Stockholm universities that studied the money production from an energy consumption point of view and a macroeconomic level stated that running a server on Ripple was comparable to the energy needs of running an email server.
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