The cryptocurrency XRP hit $1 on Tuesday morning EDT amid a surge in price that has seen the value of each coin increase by over 38 percent in the last 24 hours and more than 72 percent in the past week.
It brought the total value—or market cap—of all XRP tokens in circulation to more than $45.5 billion. That had fallen to $42.4 billion at the time of writing.
According to price tracking site CoinMarketCap, XRP temporarily became the fourth-highest-valued cryptocurrency in the world in terms of market cap, narrowly ahead of fellow cryptocurrency Tether. Tether overtook XRP again later in the morning as the latter’s price began to fall below $1.
The price increase comes amid an ongoing lawsuit involving Ripple Labs—the developer behind XRP—and the Securities and Exchange Commission (SEC).
Over the weekend, Ripple won a bid to keep its private emails from going public amid the lawsuit, but it is not clear if this was the sole reason for the price jump.
Earlier pessimism surrounding XRP’s price may have been U.S.-centric, according to crypto news site Coindesk, as despite the currency being suspended from many western trading platforms amid regulatory concerns, some platforms elsewhere in the world are still trading it.
What is the lawsuit?
The SEC announced it had filed a lawsuit against Ripple Labs and two of its executives in December 2020, claiming XRP was a security and that the company had raised more than $1.3 billion through the sale of XRP tokens, which the SEC called “an unregistered, ongoing digital asset securities offering.”
It adds: “The complaint alleges that the defendants failed to register their offers and sales of XRP or satisfy any exemption from registration, in violation of the registration provisions of the federal securities laws.”
Other popular cryptocurrencies such as Bitcoin and Ethereum are not treated as securities by the SEC on the basis that they are not controlled by any central entity—they are termed “decentralized”.
Bitcoin and Ethereum are also gradually minted over time in a process known as “mining,” in which cryptocurrency enthusiasts essentially create tokens using computing power.
All of the 100 billion XRP tokens, meanwhile, were created in one go by Ripple in 2012. Ripple also controls a big portion of the existing XRP tokens, leading to debate about whether or not the cryptocurrency is decentralized.
Ripple is said to have placed around 55 billion XRP tokens in an account and periodically released some of them into the open market. Around 45.4 billion are currently in circulation.
XRP tokens are not to be confused with Ripple itself. The tokens were created as a currency to facilitate financial transactions via Ripple’s digital payment network that banks and other financial institutions can use to send funds. The network is known as RippleNet.