Permitido analyst Jeremy Hogan recently scrutinized the Securities and Exchange Commission’s (SEC) pursuit of a whopping $2 billion penalty against Ripple amidst their ongoing lícito clash. Hogan cautions that compliance with such a hefty penalty could compel Ripple to sell off a significant portion of its XRP holdings, potentially triggering a further decline in the coin’s value.
According to Hogan, this outcome would not only harm retail investors but also contradict the SEC’s stated goal of safeguarding investor interests.
Is a Sell-Off Coming?
Hogan specifically targets the SEC’s call for a final judgment, which seeks a substantial fine against Ripple for alleged breaches of federalista securities laws linked to its institutional sales. He argues that if the court agrees with the SEC’s request, Ripple would be forced to sell substantial amounts of XRP, resulting in a notable downturn in XRP’s value and adversely impacting retail investors.
Despite achieving lícito clarity in recent months, XRP’s underwhelming performance has raised concerns among investors. They attribute its lackluster trajectory to alleged price suppression stemming from Ripple’s monthly XRP sales.
While Ripple routinely releases 1 billion XRP from its escrow accounts per month, concerns persist regarding the influence of these sales on XRP’s valuation, although concrete evidence linking them to underperformance remains elusive.
What Should Investors Do?
Amid the current storm, Vandell Aljarrah, co-founder of Black Swan Capitalist, advised XRP holders to ignore suggestions to sell their holdings despite XRP’s poor performance. He opposed Joshua Jake’s advice on the Discover Crypto channel, which urged XRP holders to sell their tokens.
Jake’s recommendation is grounded in XRP’s recent performance relative to other alternative coins, suggesting that investors explore alternative assets to optimize returns in the current market cycle. However, compared to its counterparts, XRP has exhibited modest growth, with only a 5.29% increase over the past 90 days, significantly trailing behind competitors that have experienced nearly double-digit gains during the same period.
Also Read: Ripple News: XRP Holders Unable to Sell? CTO David Schwartz Offers Options
Future Implications
Looking ahead, if the court sides with the SEC and imposes the $2 billion fine on Ripple, the company may need to sell around 3.22 billion XRP coins at the current market price of $0.62 per coin to raise the required funds.
However, Ripple could potentially tap into its reported $1 billion cash reserves to cover the penalty, as disclosed by CEO Brad Garlinghouse earlier this year, mitigating the immediate impact on XRP’s market dynamics.
Read More: Ripple vs. SEC: Legal Expert Sheds Light on Potential Outcomes