Binance to Delist $XRP Leveraged Tokens Amid SEC Lawsuits

Leading cryptocurrency exchange Binance has recently announced it’s delisting its XRPUP and XRPDOWN leveraged tokens on July 25 at 6 am UTC, in a move that comes at a time in which both Binance and Ripple Labs were sued by the U.S. Securities and Exchange Commission (SEC) over the sale of alleged unregistered securities.

According to Binance’s announcement, both leveraged tokens offering users exposure to long or short $XRP are going to be delisted from the platform at the specified date, and users are advised to redeem their tokens via the wallet function before it arrives.

The announcement details that if users are still holding their leveraged tokens after they’re delisted Binance will convert them into Tether’s USDT stablecoin based on the net asset value they had at the time of delisting.

Leveraged tokens, it’s worth noting, provide traders the opportunity to magnify their exposure to specific cryptocurrencies such as XRP. Using a sophisticated algorithm to adjust the token’s leverage in real time, these leveraged tokens ebb and flow with the price movements of their underlying cryptocurrency. This essentially means that as XRP appreciates, the leverage of its associated token follows suit, and vice versa.

For instance, a 3x long leveraged token pegged to XRP has the goal of mirroring thrice the daily percentage fluctuation of XRP’s price. Hence, when XRP experiences a 1% rise, the token should ideally surge by 3% The mechanism works both ways, however, and if XRP slides by 1%, the token should slide by 3%.

The delisting comes at a time in which Binance and Ripple, a major player in the XRP space, are both dealing with lawsuits from the SEC, which alleges both violated securities laws in different ways.

Notably, as reported, large holders of XRP, colloquially known as whales in the cryptocurrency space, have reportedly amassed a staggering 1.1 billion XRP, equivalent to roughly $570 million, since February.

Earlier this month, as CryptoGlobe reported, XRP whales accumulated over 360 million tokens after the price of the cryptocurrency tumbled by around 12% within a single week. The dip was enough for whales holdings between 10 million and 100 million XRP tokens to add to their stash.

Notably, a discernible pattern in the activity of daily active addresses might indicate that the native token of the $XRP Ledger, XRP, is setting the stage for a significant price pump. The pattern has seemingly been spotted on multiple occasions in the past, leading to notable spikes.

Featured image via Pixabay.

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