XRP spike on hoax filing a ‘bad look’ but won’t sway SEC’s ETF approvals

November 15, 2023 Alex Rustok

The Nov. 13 XRP (XRP) price action stemming from a falsified BlackRock XRP trust filing shouldn’t sway the United States securities regulator’s decision to approve or delay spot Bitcoin (BTC) exchange-traded funds (ETFs) — but it isn’t a good look, say industry observers.

The Securities and Exchange Commission has previously claimed the Bitcoin market can be manipulated and has knocked back spot Bitcoin ETFs, citing a lack of market manipulation controls.

Bloomberg ETF analyst Eric Balchunas told Cointelegraph the fake XRP filing should have little to no impact on the SEC’s final decision.

“We doubt this will impact the situation with spot Bitcoin ETFs,” Balchunas said. However, he added the incident could validate the SEC’s beliefs.

“There’s no doubt it is a bad look that arguably validates the ‘fraud and manipulation’ that the SEC used as grounds for past denial.”

The Nov. 13 filing on the Delaware list of corporations website showed BlackRock creating the “iShares XRP Trust” — a precursor to launching an ETF.

The filing resulted in XRP spiking 12.3% in 30 minutes before it tumbled back down just as quickly once the filing was outed as a hoax by Balchunas and others who received BlackRock’s confirmation that the filing was made by someone posing as its managing director Daniel Schwieger.

Michael Bacina, a partner at the law firm Piper Alderman and chair of the industry group Blockchain Australia, told Cointelegraph he would be “surprised” if the SEC used the incident to postpone ETF applications.

“It’s unlikely an isolated rumor such as this would provide a legal basis for delaying ETF applications already being considered, particularly where they are already subject to deadlines,” he said.

Lucas Kiely, the CEO of wealth management platform Yield App, said the faked XRP filing wouldn’t sway the SEC and stressed the crypto community should “calm down.”

“It is highly unlikely that this incident will play any role in that decision,” Kiely sa.

He iterated that many X (formerly Twitter) pundits have posted fear-mongering headlines to capture audience attention and “spoof the markets.”

“Overall, this is a keep-calm and carry-on moment for the industry and likely a mild amusement for BlackRock.”

XRP filing ‘could easily undermine’ ETF efforts

The SEC has rejected several spot Bitcoin ETFs in the past on claims that investors aren’t protected from “fraudulent and manipulative acts and practices,” argues James Edwards, a crypto analyst at Australian fintech firm Finder.

There’s no reason to suggest it will detract from that view, Edwards claimed.

Related: Bitcoin ETFs to push US slice of crypto ETF trading volume to 99.5% — Analyst

“Unfortunately, events like these could easily undermine efforts to launch a Bitcoin ETF in the U.S.,” Edwards said.

“The onus will be on ETF applicants like BlackRock to demonstrate that they are somehow able to protect clients from market manipulation and fraud, which is difficult given the opaque nature of crypto markets.”

The fake XRP trust filing will be referred to the Delaware Department of Justice for further investigation.

BlackRock filed for a spot Ether ETF on Nov. 9. It is now awaiting regulator approval in addition to its spot Bitcoin ETF filed in June.

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