Stellar Lumens Dropping Because Of XRP Lawsuit?

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Last Updated on 2 January 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Measured as from the top, Ripple Labs XRP coin has now gone from a market cap back in 2018 of $137 billion to a mere $10 billion. Although that is still an admirable war chest which is left for Brad Garlinghouse to fight the SEC accusations as laid out in their lawsuit, it also means he now presided over the third biggest economic collapse in history.

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Lehman Brothers and Washington Mutual

XRP is not bankrupt at the time of writing, and may very well return to normalcy at a certain moment, but as Joshua Frank, CEO of crypto research company The Tie stated earlier this week XRP is effectively the third largest collapse of all time behind Lehman Brothers and Washington Mutual.

Meanwhile money keeps flowing into other coins, most notably into Bitcoin of course, but also in a string of other altcoins who have been going from strength to strength. Those who have decided to take their money out of XRP are (apparently) keeping it in crypto. That is the good news.

The bad news is that any rumor of a possible SEC spread to other coins means FUD (Fear, Uncertainty and Doubt) creeps in quickly. This was the case with Chainlink because of a rumor that it’s eternal nemesis Zeus Capital started, and has even been more true for Stellar, the crypto company of XRP co-founder and former CTO Jed McCaleb.

Weekly loser

If you look at the worst performing cryptocurrencies over the past week (measured on 2 January 2021), XRP is the poorest loser with some 24% downward price pressure, mostly because of Coinbase’s decision to delist the Ripple Labs crypto. However, closely on its heels is Stellar which lost some 11% in that same period. The factor that connects XRP and Stellar is of course former XRP founder Jed McCaleb, who now leads Stellar.

McCaleb received 9 billion XRP coins when the crypto started trading and ever since his departure from Ripple Labs, he has been receiving a steady stream of XRP coins because of the settlement agreement.

This year, and certainly when XRP was rising in November, McCaleb sold hundreds of millions of XRP coins every week. However, on 23 December, two days after the SEC’s lawsuit, the former CTO suspended his XRP sales.

Few billion XRP

Ever since known crypto analyst Max Keiser claimed that Stellar Lumens was possibly next on the SEC’s hitlist, combined with the fact that McCaleb has a few billion or so XRP coins still in holding, the value of Stellar’s XLM coin has dropped significantly.

Even Grayscale Investment Fund, which holds a record $19 billion in crypto assets under management, started offloading Stellar Lumens at the same time as it started selling XRP.

Stellar’s digital asset had rallied in the months leading up to the SEC announcement that it would sue Ripple because it considers XRP a security, but given McCaleb’s history at Ripple Labs and certainly after Keiser’s prediction that Stellar might be next, XLM has suffered a significant correction and plummeted hard, placing the cryptocurrency among the top losers of the past week.