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Binance Delists XRP Tokens: Does the Exchange Expect the SEC to Win its Case Against Ripple?

Published July 12, 2023 5:21 PM
Omar Elorfaly
Published July 12, 2023 5:21 PM

Key Takeaways

  • Binance will delist XRP leveraged tokens
  • XRP is already in peril as SEC vs. Ripple goes on
  • Will USDT see a boost following Binance’s announcement?

The world’s biggest crypto exchange announced it will be delisting XRP leveraged tokens from its platform this month. The decision comes at a time when both Binance and XRP’s creator Ripple are facing litigation from their regulating body, the US Securities and Exchange Commission.

Binance also announced that any leveraged XRP tokens remaining in customer account past the deadline will be sold and exchanged for Tether’s USDT stablecoin. 

The announcement is likely a product of one of two causes:

  • Binance firmly believes that Ripple has no hope of winning its case against the SEC. OR
  • Binance is trying to appeal to the SEC’s grace by removing crypto tokens that the regulating body does not approve of

An XRP Defeat?

Binance’s announcement  comes as a huge blow to Ripple, an exchange that has been at war with the SEC for more than two years. The SEC claims that Ripple is guilty of trading in unregistered securities, namely XRP. 

“Users are advised to redeem their leveraged tokens via the wallet function or the Leverage Tokens page before the delisting” reads the announcement, referring to the delisting of XRPUP and XRPDOWN leveraged tokens by July 25 at 6 am UTC.

XRPUP and XRPDOWN leveraged tokens provide long- or short-term exposure to XRP as an investment. 

Binance also announced that any remaining XRP in their customers’ accounts past the July 25th deadline will be sold. Their value at the time will be exchanged for USDT, a stablecoin created by Tether.

USDT Is A Curious Choice

USDT, and other stablecoins, are not exactly on the SEC’s “nice list”. As far as the SEC and its Chair Gary Gensler are concerned, any cryptocurrencies that are not Bitcoin, Ethereum, LiteCoin, or Bitcoin Cash have not gained the “not securities” clearance. 

For that very reason, emerging exchanges such as EDX Markets are not allowing their users to trade in any token that is not part of the list.

However, the jury is still out on stablecoins. In a recent Capitol hearing, Federal Reserve Chair Jerome Powell showed his support for stablecoins as a form of payment, pitting himself against SEC’s Chair Gary Gensler. 

“We do see payments stablecoins as a form of money, the ultimate source of credibility in money is the central bank,” said Powell, highlighting the point behind stablecoins.

A stablecoin is a cryptocurrency that pits its value to that of a fiat currency, in this case, the US dollar. 

But, why would Binance choose to exchange the remaining XRP to USDT, rather than Bitcoin or Ethereum?  

The question perhaps points towards the fact that Binance is not doing this just to please the SEC. That leaves us with one assumption: Binance doesn’t have faith in XRP’s future.

What’s Going On With XRP/Ripple?

Ripple has been dealing with the SEC’s lawsuit for over two years. The exchange saw several glimpses of hope along the legal journey, yet nothing has come to substantial fruition.

The SEC’s lawsuit claims that the exchange made millions in profits trading in XRP, its native crypto token. The issue is that the SEC sees XRP as a security, one that Ripple hasn’t registered, rather than a commodity. Needless to say, Ripple disagrees with the sentiment and has gone distance, attempting to disprove the notion.

Ripple, led by its CEO Brad Garlinghouse even called upon the Hinman documents, a series of messages that accompany a speech given by former SEC director William Hinman. In his speech, Hinman noted that crypto tokens start off as securities, yet may transition to commodities as they reach sufficient decentralization. 

Although the SEC attempted to keep the documents sealed, Ripple managed to convince the federal government to release them. The news resulted in a surge of optimism regarding Ripple/XRP, with crypto legal experts predicting an outright win for the exchange. 

Garlinghouse even took to Twitter to claim that the SEC acted in bad faith and that the regulating body “knowingly created confusion about the rules, and they used that confusion through enforcement.” However, there’s barely any news on Ripple’s case with the SEC.

Now, with Binance abandoning XRP, bad omens may be surrounding the future of XRP and Ripple. 

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