By Solomon Odunayo
As reported by Wall Street Journal, Phil Liu, the co-founder of a crypto asset management firm based in the New York, Arca, has stated that XRP is on the verge of becoming “a remnant of history.”
Phil Liu noted: “I think that this thing will be a remnant of history by the end of 2021.”
On 22nd December 2020, the United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, the major distributor of the digital XRP.
Read Also: Despite SEC’s Lawsuit, Ripple Unlocks about 1 Billion XRP, Sends 477 Million XRP to Jed McCaleb
The lawsuit also targets the CEO of the payment firm, Brad Garlinghouse, and its co-founder Chris Larsen, stating that the two executives personally sold about $600 million worth of XRP deemed as an unregistered security.
In this regard, Liu, who is a securities lawyer, says he sees the allegations presented in the complaint as compelling. He pointed out that the major source of revenue of Ripple is XRP while describing its products as inadequate.
It can be recalled that the CEO Brad Garlinghouse told Financial Times in February 2020 that the payment firm wouldn’t be profitable without its periodic XRP sales:
“We would not be profitable or cash flow positive [without selling XRP], I think I’ve said that. We have now.”
The securities lawyer, Liu, also predicted in late December 2020 that Ripple could eventually become insolent by the end of 2021 since the firm as no alternative means to XRP sales as a source of revenue:
“I don’t see a viable alternative to replace XRP sales except to move out of the US and exclude US investors from buying XRP. They would have to start from scratch, because all XRP profits would be disgorged since they all occurred when Ripple was a US-based company.”
However, Ripple’s lawyer, Andrew Ceresney, has a contrary opinion. In his assertion, he said XRP does not fit the Howey test, which is used while determining whether a particular crypto asset is a security or not.
“To us, this is the SEC trying to stretch Howey beyond its breaking point.”
Meanwhile, the pretrial conference on the case has been slated for 22nd February 2021.
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