Binance crypto exchange, has recently made an announcement regarding the delisting of its XRPUP and XRPDOWN leveraged tokens.
This decision comes at a time when both Binance and Ripple Labs are facing lawsuits from the U.S. Securities and Exchange Commission (SEC) regarding the alleged sale of unregistered securities.
Binance stated that both XRPUP and XRPDOWN leveraged tokens, which offer users exposure to long or short positions on XRP, will be delisted from the platform on July 25 at 6 am UTC. Users are advised to redeem their tokens using the wallet function before the specified date.
In case users still hold their leveraged tokens after delisting, Binance will convert them into Tether’s USDT stablecoin based on their net asset value at the time of delisting.
Leveraged tokens allow traders to amplify their exposure to specific cryptocurrencies, such as XRP. These tokens use an advanced algorithm to adjust their leverage in real-time, mirroring the price movements of the underlying cryptocurrency. As XRP’s price fluctuates, the leverage of its associated leveraged token follows suit.
For example, a 3x long leveraged token linked to XRP aims to reflect three times the daily percentage fluctuation of XRP’s price.
When XRP experiences a 1% increase, the token should ideally surge by 3%. Conversely, if XRP declines by 1%, the token should slide by 3%.
The delisting of XRP leveraged tokens coincides with the ongoing legal battles between Binance and Ripple. Both companies are facing lawsuits from the SEC, accusing them of violating securities laws in different ways.
Interestingly, large holders of XRP, commonly referred to as whales, have reportedly accumulated a significant amount of the cryptocurrency. Since February, these whales have amassed approximately 1.1 billion XRP, equivalent to around $570 million.
There are indications of a discernible pattern in the activity of daily active addresses associated with XRP, suggesting a potential significant price increase. Similar patterns have been observed in the past, leading to notable price spikes.