Florida personal injury lawyer Jeremy Hogan has become a bit of a folk hero when it comes to Ripple (CCC:XRP-USD). Hogan recently discussed the timeline for the case to a conclusion.
According to Hogan, a settlement likely won’t come until after the close of fact discovery, likely after Oct. 16. If the two parties don’t settle, Hogan believes U.S. District Judge Analisa Torres, who’s handling the case, will make a summary judgment in early 2022.
Based on this timeline, does it make more sense for investors to hold off buying XRP until January or whenever the judge rules on the case? Or before the case has concluded, when the risk-to-reward is highest?
Let’s consider both sides of the argument.
Buy Ripple Today Before a Settlement
You know what they say. No risk, no reward. XRP is currently trading around 72 cents, up 200% on the year, but down considerably from its April highs above $1.80.
I don’t have a crystal ball, but common sense suggests that if Ripple Labs only gets a slap on the wrist and the SEC’s claim that XRP is “being sold as part of an investment contract,” doesn’t hold water with the courts, the price of XRP should quickly return to a dollar or more.
If you want to get a better idea of all the legal wrangling that stand in the way of resolving these issues, I recommend you watch Hogan’s YouTube video – there is a transcription – discussing the timeline. As a lawyer, he does a good job explaining matters in a simple way.
I take two things from the video.
First, the case is about two major issues: 1) Whether XRP was sold as a security, and 2) Was Ripple provided a Fair Notice of a violation. Hogan doesn’t spend a lot of time in his video on the first issue. He spends a significant amount of time on the second. I assume that’s because Hogan is a supporter of Ripple in this lawsuit.
For me, it’s not the issues at stake that I take from Hogan’s comments but the fact that Ripple supporters need to chill. The case’s 60-day discovery extension is not a big deal. As legal cases go, he believes the process is rolling along nicely. Investors need to understand this.
That being said, Hogan does say that time is the friend of the SEC and the enemy of Ripple. He even points out that Ripple’s documents point out to the courts that the longer this goes, the more damage could be done to its entire business in the U.S. and not just XRP.
At this point, I don’t think anyone knows what’s going to happen, which is why XRP has trended downward over the past three months. It may continue that downward trend to 22 cents, where it traded at the beginning of January.
The uncertainty is your friend if you want to buy into XRP.
In May, I recommended XRP as a speculative bet under $1. Now trading around 72 cents, I don’t think much has changed other than the fact Ripple’s gotten one month closer to a possible resolution to its SEC issues.
As a utility, Ripple Labs’ ability to efficiently process payments globally is top drawer. That makes XRP a worthy cryptocurrency to own. If you buy some, do so, keeping in mind that you might want to keep some dry powder should its price drop throughout the summer due to fears of a bad legal outcome.
I can remember when I was a teenager and first started dating. I got my first serious girlfriend, and it didn’t work out. My mom said it just wasn’t meant to be. Looking back, they were wise words. But at the time, boy did they seem like a kick in the gut.
If XRP and Ripple Labs are meant to be, getting confirmation of that fact through a settlement or court judgment is a smart way to play the cryptocurrency at this juncture.
Yes, it means your average cost will be much higher, but if it’s meant to go to the moon – let’s say $5 – buying for over $1 will still provide significant upside potential while protecting your capital. And that’s the most important part of investing.
If you don’t protect your capital, you won’t have any upside to worry about. To me, waiting for closure exemplifies the saying, “Discretion is the better part of valor.”
In addition, as Ripple CEO Brad Garlinghouse said in April, it is prepared to relocate to a friendlier jurisdiction should the courts and the SEC come down hard on it. Furthermore, it’s prepared to move away from an XRP-based platform if it gets in the way of RippleNet serving customers efficiently.
“We could do that. We’ve always thought about our product as ‘How do we solve a customer’s problem first and foremost?’ And I think that has served our growth,” Garlinghouse told CNN in April. “It’s a reason why we have seen so much activity now, billions and billions of dollars of transactions across Ripplenet, our network for payments.”
So, not only is XRP up in the air at the moment but so too is the entire platform. What happens next at Ripple Labs depends almost entirely on what happens in the court case.
Better to remain patient and buy on concrete evidence that Ripple will carry on.
The Bottom Line
I continue to like Ripple and XRP because it’s more than just a cryptocurrency. Its utility with customers is tangible and real.
If you are a speculative investor and can afford to lose 100% of your investment, I would be buying XRP at these prices. And, if prices fall, buying some more.
But, if you are anyway risk-averse, you have no business buying XRP until its legal issues are fully resolved.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.