The price of Ripple (XRP) exploded back in July after an American judge ruled that the asset was not a security in certain cases.
It has now erased those gains and is currently one of the worst-performing cryptocurrencies over the past week.
XRP at the time of writing was trading for $0.48, according to CoinGecko. That's a 8% drop in value in seven days.
The asset boomed following the court ruling and touched as high as $.0.82. Institutional investors plugged cash into the asset and Ripple's General Counsel Stu Alderoty said he expected U.S. banks to go back to using the fintech firm’s On-Demand Liquidity (ODL) product.
But it has since dropped by more than 40%.
Back in 2020, the U.S. Securities and Exchange Commission (SEC) hit Ripple with a $1.3 billion lawsuit, alleging that it had misled investors and sold unregistered securities in the form of XRP.
But a federal district judge in July wrote in a partial ruling that programmatic sales of XRP to retail investors did not qualify as securities.
Even though the judge said that $728 million-worth of contracts for institutional sales did constitute unregistered securities sales, investors—and Ripple Labs—interpreted the ruling as positive.
About institutional sales, Torres wrote: "Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act."
In the days after the ruling, SEC Chair Gary Gensler said said that he was “disappointed” with Judge Torres' decision. He added at the time, in July, that the commission was, “looking at it and assessing that option," when asked about filing an appeal.
The fintech company behind the asset, Ripple Labs, was launched to help banks and other financial institutions move money fast and with very low fees.
XRP is still over 85% down from its 2018 all-time high of $3.40.