If you invested $1,000 in Ripple (XRP) in 2018, you would have this amount now.

Cryptocurrencies have experienced booms and busts over the years. XRP (Ripple) (XRP -0.76%) It once soared to $2.78 during the 2018 crash. If you bought $1,000 of XRP in early 2018, you would now have only $185 left.

So why didn’t XRP rebound as follows? Bitcoin Are there other cryptocurrencies? Cryptocurrency creator Ripple is engaged in a fierce lawsuit with the U.S. Securities and Exchange Commission (SEC) over its regulatory status.

XRP is still one of the largest cryptocurrencies today, and the pending lawsuits overshadowing the cryptocurrency make XRP a potentially high-risk, high-reward investment idea.

Here’s what you need to know.

What is XRP (Ripple)?

Ripple is a blockchain payments network that helps financial institutions settle cross-border transactions. Most people call Ripple stock a cryptocurrency, but Ripple is technically a network and XRP is a cryptocurrency itself. Ripple’s main goal is to help funds move more freely and quickly around the world.

Cross-border transactions, where money is exchanged between countries, require multiple steps and can take one to four business days to clear through the traditional SWIFT system, which is how banks currently transfer most money internationally. Transactions on Ripple can be completed in seconds. The XRP token acts like a shapeshifter, converting from currency A to XRP and then to currency B on the other side. This process, made possible through Ripple Labs’ global network of banking partnerships, is generally transparent to senders and recipients.

Despite not recovering from its peak six years ago, XRP remains the sixth-largest cryptocurrency today with a market capitalization of $27.5 billion. Why hasn’t XRP rebounded like other cryptocurrencies? The SEC sued Ripple (the Company) for allegedly improperly selling XRP tokens.

SEC vs. Ripple, summarized in bullet points

Image source: Getty Images

The lawsuit filed in late 2020 boils down to the question of whether XRP should be treated like a security, like shares of a company (which are highly regulated), or whether it should be treated as a currency. Ripple scored a significant victory in July 2023 when the judge presiding over the case ruled that selling XRP on secondary markets such as exchanges did not violate the law.

However, it was not a thorough cleaning. The company also sold large quantities of XRP directly to institutional buyers, which a judge ruled violated federal securities laws. Now the two parties are preparing for relief, a post-judgment court proceeding to determine Ripple’s punishment for selling to the institution.

Currently, the two sides are engaged in a fierce war of words over what evidence can be used in the relief process. That process has several key deadlines over the next few months, so there are still more deadlines to come. Ultimately, relief could include fines for Ripple or a court order affecting the broader cryptocurrency industry.

Should Investors Buy Ripple Now?

XRP nearly doubled in July 2023 following a partial Ripple win. However, as there is still a lot of uncertainty about XRP and Ripple, their prices have steadily fallen again. There is no way to know what the ultimate relief will be until the litigation is over, making XRP a very speculative token to own right now despite its large market capitalization.

XRP price data from YCharts

It’s probably fair to say that XRP could generate multiple-bagger returns if Ripple performs well in the remainder of its legal battle. Ultimately, XRP was trading as high as $2.78 in early 2018. A few years from now, the price of XRP will largely depend on how widely Ripple is adopted in the global banking landscape.

The suit remains a wild card. If you are a risk taker, consider purchasing. handful It uses XRP to capture potential returns if Ripple wins big in court. You can always purchase a heavier product later once the troubleshooting process becomes clearer.