The 'Devil's Coin', Ripple…Is It Possible to Create New Myth?

Ripple(XRP)'s price is staying in 'usual'.

In March 2022, Russia and Ukraine were trapped in the fire of war. This war was not just a battle between the two countries, but a proxy war between Western forces centered on the United States and those opposed to it. Amid the international situation, the status of the dollar and SWIFT has begun to falter.

The emerging power led by Russia, which has been tied up by SWIFT including China, Iran, Saudi Arabia, and the UAE, have begun to challenge the existing financial system. As the result of confliction , the financial system that controlled the existing global financial order is also naturally being reorganized.

This situation is turning to XRP, which has appeared in the world by shouting 'SWIFT 2.0' since its birth. 'Quick remittance', 'efficient cross-border payment'. Ripple Labs' XRP, which promoted all of this like a slogan, has emerged as a hot topic.

From the modifier 'King of Coin' to 'World Key Currency,' the price of the XRP is estimated ridiculously low. XRP, which had maintained third place in cryptocurrency market capitalization until December 2020, fell into a 'swamp' after being embroiled in a lawsuit with the U.S. Securities and Exchange Commission(SEC).

In the early days of the lawsuit, XRP price broke the $2 mark, but it was only for a while. With the growth of the cryptocurrency market, the price of XRP seemed to remain flat while numerous cryptocurrencies continued to grow for more than a year.

The Ripple foundation, which issues XRP, did not focus only on the lawsuit again SEC.

The Ripple foundation continued to move toward the global spread of XRP. The Ripple foundation also made the amazing steps during a lawsuit with the SEC. It launched a cryptocurrency investment fund in cooperation with SBI Holdings, a large Japanese financial company. Based on the advantages of XRP, which specializes in international remittance, it has expanded around the world.

As a milstone, the Ripple foundation has succeeded in attracting 'oil money' from the Middle East. In fact, the Ripple foundation succeeded in introducing ODL, a powerful payment network that could replace Swift, along with Pyypl, a payment service provider in the Middle East.

News of the Ripple foundation's global ODL expansion has been continuously heard. The Ripple foundation's move makes us forget that it is a company that is facing lawsuit with SEC. However, despite the big favorable factors, the price of the XRP went back to its 'usual' place as if nothing happened.. While numerous coins soared amid the rise of cryptocurrency last year, the price of XRP did not rise significantly. Investors refer to XRP's price move as the 'Devil's Coin'. In the cryptocurrency community, there is a a neologism called 'RCA(Ripple Cheated Again)'.

An interesting report was released around the time many investors expressed doubts and skepticism about the price of XRP. On Oct. 4, 2021, Albert Metz, a securities and financial expert who worked for the U.S. Department of Justice, wrote a report on the manipulation of XRP prices.

Many foreign media also raised suspicions about manipulating ripple prices.

Cryptocurrency media 'UToday' reported suspicions that the Ripple foundation has been adjusting prices of XRP by selling XRP supplies held by the Ripple Foundation. The logic is that whenever the price of XRP is about to soar due to favorable factors, the foundation controls the price by selling XRP that the foundation hold. On the 1st and 11th, the Ripple foundation's wallet pointed out that 100 million of XRP and 347.2 million of XRP moved to various exchanges, respectively, and provided grounds for the alleged manipulation.

Many investors who have lost confidence in the XRP are still shouting 'RCA'.

In this situation, there is a serious incident to be pointed out. The fact is that the Ripple foundation is in a lawsuit with SEC, one of the largest power agencies. The core issue of the lawsuit betweem Ripple and SEC is simple. It is whether the XRP is 'securities or not.' In order to determine this, it is necessary to look at the 'Howey Test,' which is the standard for securities judgment.

The criteria for the Howey test are largely classified into four categories. It is whether money has been invested, whether a company has invested, whether investors expected investment profits, and whether investment profits are generated by third-party efforts.

The fourth clause is what should be noted when evaluating the price of XRP in litigation. The entity that recruited investors' assets should consider whether the increase in assets invested by investors has been made through certain actions.

As mentioned, the Ripple foundation's performances during the lawsuit was unusual. Despite the stigma of being a 'company in litigation,' the company made a continuous positive impact through the 'super-special' deals. However, if XRP prices soar due to these favorable factors, Ripple foundation's XRP can be classified as a securities according to the Howey test criteria.

The Ripple foundation's price manipulation of XRP is also in line with this fact. It can be interpreted that Ripple, who is in a lawsuit with SEC for violating the Securities Act, intentionally sells supplies and adjusts prices to prove that XRP is not securities.

No cryptocurrency has given investors more love and hate than XRP.

The vision revealed by the Ripple foundation, the efficiency of the XRP, and the heart-rending rumors related to the XRP. Investors, who are expecting this lot of news and hope, are still constantly singing 'Hope Song' with XRP.

The status of the dollar and the SWIFT is not as good as it used to be. Recently, yuan trading has increased just by looking at crude oil trading. The term 'petrodollar' is overshadowed. Moving assets across borders is inevitable in the future. Future generation is demanding a faster and more efficient system. Competitors such as the digital yuan payment network 'CIPS', Bitcoin Lightning Network, and Ripple ODL have emerged.

The story that "the patient wins in the end" has become a myth. It remains to be seen whether the Ripple foundation's XRP growth story can create a myth of establishing a new financial system.

권승원 기자 ksw@