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Litecoin has surpassed Ripple’s XRP to become the fourth highest cryptocurrency based on market capitalization. At press time, the Litecoin market cap was $8.45 billion, while XRP is at $8.2 billion based on data from CoinMarketCap.
XRP dropped following a lawsuit by The U.S. Securities Exchange Commission on both the founder and current Ripple CEO for raising more than $1.3 billion through an “unregistered securities offering” after selling the ‘ XRP’ token.
Since the news about the lawsuit went public on December 22nd, the market capitalization has dropped by about 64% from $23 billion.
Before the lawsuit announcement, XRP, like other digital currencies, has spiked in value this year as major investors and companies have continued to adopt cryptocurrencies led by Bitcoin. Before Ripple’s legal woes, XRP’s price had surged by around 140% year-to-date. The asset is currently trading at $0.17.
The lawsuit notes that XRP is a security and not currency and claims that Ripple’s founder Christian Larsen and current CEO Brad Garlinghouse violated securities laws by selling XRP over a seven-year period. Ripple executives have since hit out at SEC over the lawsuit.
“XRP is a currency and does not have to be registered as an investment contract. In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.” Garlinghouse said.
Bitstamp to delist XRP
Following the lawsuit, some exchanges have announced the delisting of XRP. For example, cryptocurrency exchange Bitstamp will halt XRP trading and deposits for all U.S. customers on Jan. 8, 2021.
With the security label, XRP will be subject to strict new SEC regulations that can heavily impact Ripple. Ripple owns about 55 billion of the total 100 billion XRP tokens in existence.