Latest Update in SEC Vs. Ripple Case

Ripple just recorded a partial victory against the US Securities and Exchange Commission on Wednesday. Southern New York District Judge Analisa Torres decided to significantly reduce the fine of the tech firm to $125 million out of the $2 billion sought by the regulator.

A Southern New York District Judge has ruled in favor of Ripple in the ongoing case with the US Securities and Exchange Commission (SEC). The court has slashed the tech firm’s fine to $125 million out of the $2 billion total penalty sought by the regulator.

The court also denied the SEC’s request for disgorgement and prejudgment interest against Ripple.

Although Ripple was found liable for selling unregulated securities to institutional investors, Torres cited the absence of fraud or intentional wrongdoing in lowering Ripple’s penalty.

The possibility of appeal by both sides is still up for grabs. However, Stuart Alderoty, Ripple’s Chief Legal Officer, appeared to have agreed with the court’s ruling. If his company shares the same view and the SEC will no longer pursue its legal remedies, it could mean the finality of the landmark case.

Price Action of Stellar (XLM) Today

Despite still having to deal with a hefty fine, the crypto community viewed the event as a major victory for Ripple. As a result, the tech firm’s native token, XRP, saw a significant price movement this Thursday.

XRP’s price catapulted nearly 30% from a $0.4942 low to a $0.6408 high within the past 24 hours. As of 12:00 noon UTC today, the token remained within the $0.60 range with over 17% recovery compared to its price at the same time yesterday.

Interestingly, Stellar (XLM) reflected the same price action of XRP on a lesser scale. Within the same timeframe following the SEC vs. Ripple ruling, XLM jumped by around 10% from a $0.09355 low to a $0.1035 high. This noon, it still exhibited a nearly 5% gain in its price since yesterday at the $0.10 mark.

Correlation of XRP and XLM

Stellar’s rebound has been somewhat expected as it had the tendency to ride on the coattails of XRP. In fact, investment and stock advisor Macroaxis determined that the three-month correlation coefficient of XLM and XRP is 0.86. The caveat, however, is that XLM tends to generate 3.24 times less return on investment than XRP.

The one-day, one-month, and one-year charts below from Coinmarketcap further illustrate the positive relationship between their prices.

David Schwartz, Ripple’s CTO, acknowledged this trend last year. He used the high correlation of the said tokens to rebut claims that the XRP escrow unlocks have negatively impacted their token prices.

Although Schwartz couldn’t exactly pinpoint the reason behind the phenomenon, he surmised that it could be due to their shared history and nature. For context, Stellar was co-founded by Jed McCaleb, the same person who co-founded Ripple. Both tokens were also designed to offer faster and cheaper cross-border payments.

Moreover, their issuers have been introducing new updates in their ecosystems. Lately, Ripple has been busy developing its USD and US Government securities-backed stablecoin under the XRP Ledger (XRPL) and has been actively exploring several ventures around real-world asset (RWA) tokenization.

Meanwhile, the Stellar Network just announced its support for the USDC and EURC stablecoins. This allows users access to faster and cheaper transactions within Stellar and Circle’s partnered institutions.

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