Ripple just released its latest XRP markets report for Q4 2023, revealing that it changed the manner in which it sold XRP to institutions even before the pivotal July 13 ruling.
The markets report, released on Feb. 7, details the pivotal developments that occurred around the XRP market in recent times. Ripple disclosed that XRP recorded a revival in spot trading volume throughout the fourth quarter, averaging $600 million daily.
Our latest XRP Markets Report is live — detailing Q4 events in crypto that brought important topics such as compliance and anti-money laundering to the forefront, key regulatory and licensing wins, and the latest on XRP Ledger integrations.https://t.co/5cuMXiVBjl
— Ripple (@Ripple) February 8, 2024
XRP maintained this renewed investor interest despite largely underperforming other major crypto assets in the previous quarter. Overall, XRP ended Q4 2023 with a 19.5% gain. Meanwhile, Bitcoin (BTC) closed the quarter with a 56.8% surge, and Ethereum (ETH) rallied 36.5%.
Ripple then called attention to the decisive judgments recorded in its legal battle against the SEC throughout 2023. Recall that the most significant ruling came up on July 13, 2023, when Judge Analisa Torres ruled that XRP is inherently not a security.
While Judge Torres found that most sales of XRP by Ripple were not unlawful securities transactions, she noted that Ripple’s past sales to institutions did indeed contravene securities provisions.
Ripple Changed Its XRP Sale Model
Notably, the case has moved to the remedies phase, where the court would determine Ripple’s penalties for carrying out unlawful securities sales to institutions. However, in its latest XRP markets report, Ripple has clarified a significant part of these sales.
It is worth noting that Ripple has continued to facilitate sales of XRP, as evidenced by on-chain movements of funds and confirmed by the company through its quarterly XRP markets report. As a result, concerns had emerged about a possible ban on its sales or bigger penalties.
However, in the latest report, Ripple disclosed that it had already changed the way in which it sold XRP tokens to institutions even before Judge Analisa Torres’ judgment in July 2023. This entails that Ripple’s unlawful sales only involved past sales to institutions and not recent or current ODL sales.
At the earlier stage, Ripple sold XRP directly to each institutional buyer under a written contract. Judge Torres ruled that these sales, which amounted to a total of $729 million worth of XRP, constituted investment contracts, as the buyers reasonably expected Ripple to leverage the capital to improve XRP’s price, thereby getting profits.
However, the firm pivoted from this method even before the judge’s ruling. In the newer model, purchasers of XRP only buy it to hold for a few seconds as the purpose of the purchase is to facilitate quick and low-cost ODL transactions.
What Does This Mean?
This manner of sale does not involve a long-term investment in XRP. As a result, it cannot be argued that the purchasers expected to make a profit through the XRP transaction, seeing as they typically hold the asset for a short period of time.
Recall that the court recently granted the SEC’s request for documents pertaining to Ripple’s recent institutional sales in the remedies phase of the litigation.
If Ripple switched its sales model, the documents might not provide any more incriminating data, and the firm could continue its current sales without the ban.
