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Ripple (XRP) is a typical case in the cryptocurrency world where retail investors are harvested due to compliance risks.
In December 2020, the U.S. Securities and Exchange Commission (SEC) officially sued Ripple Labs and its two executives, accusing them of raising over $1.3 billion through the issuance and sale of XRP in an unregistered manner over a period of 7 years, violating U.S. securities laws by treating it as "unregistered securities."
Once the news was announced, the price of XRP plummeted by more than 50% in a short period, and many mainstream cryptocurrency exchanges around the world urgently delisted XRP trading pairs to avoid risks, directly causing retail investors holding XRP to lose liquidity, making it difficult to sell and stop losses, leading to huge losses in an instant.
This lawsuit has lasted for several years, during which the price of XRP has fluctuated violently around key court hearing points, with speculators taking advantage of both positive and negative news to engage in frequent trading, buying low and selling high, harvesting retail investors who chase prices up and down.
In 2023, the court made some favorable rulings, determining that the behavior of retail investors purchasing XRP does not constitute a securities transaction, but the characterization of sales at the institutional level remains controversial, and the compliance uncertainty of XRP has not been completely eliminated, with the subsequent price still at risk of being manipulated by news.
Temporary losses really don't mean much; experts in the crypto world have all experienced the anxiety of unrealized losses and the regret of missing out. True failure is giving up on learning and reviewing after just one loss, and thus not daring to enter the market again.
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