XRP tokens surged 8% over the past 24 hours to buck a market-wide decline following a U.S. Commodity Futures Trading Commission (CFTC) filing against prominent crypto exchange Binance.
XRP traded just under 50 cents in Asian morning hours on Tuesday, reaching a five-month high. Its XRP Ledger network has seen fundamental upgrades in the past few months that may have contributed to the rise.
However, a part of the bullish outlook came as some in the community said the classification of major tokens as a commodity in the CFTC filing against Binance could mean XRP tokens were, too, commodities instead of a security, as alleged by the U.S. Securities and Exchange Commission (SEC) in the ongoing Ripple v. SEC case.
Ripple Chief Technology Officer David Schwartz has previously made the case for XRP tokens as a commodity. “XRP is a raw good that trades in commerce and one XRP is treated as equivalent to every other XRP. That's pretty much the definition of a "commodity,” Schwartz said in a January tweet.
“No part of XRP's value comes from anyone else's legal obligations to XRP holders,” he said at the time.
Ripple has historically maintained a distance from its relation to XRP, the token that powers some of Ripple’s products and the XRP Ledger network. Any progression in the case causes XRP price movement, however.
Binance and CEO Changpeng Zhao were sued Monday as the CFTC alleges Binance offered unregistered crypto derivatives products and directed U.S. customers to evade compliance controls through the use of virtual privacy networks (VPN).
The lawsuit, filed in the U.S. District Court for the Northern District of Illinois on Monday, alleges Binance operates a derivatives trading operation in the U.S., offering trades for cryptocurrencies including bitcoin (BTC), ether (ETH), litecoin (LTC), tether (USDT) and Binance USD (BUSD), which the lawsuit referred to as commodities.
Bitcoin fell below $27,000, losing a local support level, while ether briefly dropped under $1,700 before recovering. Overall market capitalization fell nearly 3%, CoinGecko data shows.
Markets slumped almost immediately – but some market observers found optimism in the fact that tokens mentioned in the CFTC filing were commodities and not securities.
Alarm bells in the broader crypto community were sounded last month as the U.S. Securities and Exchange Commission was rumored to be cracking down on staking-as-a-service products, or protocols that pay rewards to users who lock up token holdings for a specified amount of time.