In 2020, the SEC filed a lawsuit against Ripple, accusing it of raising $1.3 billion through XRP and claiming that XRP is a security. In July 2023, the SEC lost the appeal, and XRP immediately ushered in a sharp rise in price. On August 7, the judge further ruled that Ripple must pay a fine of $125 million, but made it clear that XRP itself is not a security. Although the SEC may still appeal this ruling within the next 60 days, XRP's legal disputes may continue.

The outcome of this lawsuit is not only significant for XRP itself, but also provides a reference case for other cryptocurrencies. This is particularly important considering that XRP is most likely to enter the mainstream market through ETFs after SOL. Western retail investors often express support by buying, and XRP's 22% increase on the same day is the best proof. It is expected that this lawsuit and its impact will continue to ferment for some time.

For investors, buying XRP on dips is a strategy, but the same principle applies to other cryptocurrencies such as Bitcoin, Ethereum, SOL, BNB, etc., which have also faced disputes over whether they are securities.

The SEC usually uses the Howey test to determine whether a subject constitutes a security. The test contains four criteria: first, investors invest money; second, investors have an expectation of return; third, they invest in a common cause; and fourth, the investment income mainly comes from the efforts of others. The SEC lost the XRP case in part because Ripple and XRP are two separate entities. Even if Ripple does not exist, XRP will continue to exist on the blockchain.

In addition, buying XRP is not equivalent to buying ownership of Ripple, which is also an important reason for the SEC's defeat. In contrast, traditional US stocks are securities, and listed companies are required to disclose financial reports regularly and follow strict listing and registration procedures. Buying stocks means becoming a shareholder of the company, and even after holding a certain level of shares, you may enter the company's board of directors. Web3 tokens obviously do not meet these characteristics. In the web3 world, there are only dog ​​dealers without shareholders.

Although the SEC has regarded some cryptocurrency projects as securities, this may be a recognition because the SEC usually only focuses on projects with financial strength. Western retail investors express their support by buying, whether it is the bankruptcy of FTX or the legal dispute over XRP.