Bitwise removed XRP from its crypto index after the SEC sued Ripple

Bitwise Asset Management disclosed on December 23, 2020 that its Bitwise 10 Crypto Index Fund, quoted on OTCQX under BITW, had liquidated its XRP position after the U.S. Securities and Exchange Commission sued Ripple Labs and two executives. A Bitwise index record states that XRP then exited the associated Bitwise 10 Large Cap Crypto Index at 4:00 p.m. Eastern Time on December 23.

The decision translated a regulatory allegation into an immediate institutional portfolio change. It did not establish that XRP was legally a security. No court had decided the SEC’s claims by December 23. Bitwise instead applied its own eligibility policy after concluding that the complaint created an unacceptable risk that XRP could be deemed a security under U.S. law.

What Bitwise changed

Bitwise said XRP represented approximately 3.8% of the fund before the asset was sold on December 22, 2020. The manager reinvested the proceeds in the fund’s other portfolio assets. It did not disclose the XRP quantity, execution venue, execution price, transaction costs or exact proceeds, so the dollar size and market impact of the liquidation cannot be reconstructed reliably from the announcement.

The index committee had met on December 22 and voted unanimously for an emergency removal. Bitwise’s stated methodology required an eligible cryptoasset, in the committee’s judgment and based on knowable facts, not to face undue risk of being deemed a security. The December 23 exit therefore represented a rules-based eligibility decision by a private index provider—not an SEC order directing funds or exchanges to remove XRP.

That distinction mattered. The SEC’s December 22 complaint alleged that Ripple, co-founder Christian Larsen and chief executive Bradley Garlinghouse had conducted an unregistered, ongoing digital-asset securities offering that raised more than $1.3 billion. The regulator also alleged approximately $600 million in personal unregistered XRP sales by Larsen and Garlinghouse. Those figures were allegations in a civil complaint, not adjudicated findings on December 23.

Ripple disputed the case. In a company statement dated December 23, Garlinghouse and Ripple’s lawyers argued that XRP was a currency rather than an investment contract and said they intended to contest the SEC’s claims. Coinburn treats that response as the defendants’ contemporaneous position, not an independent resolution of the legal question.

The market signal

CoinMarketCap’s historical snapshot for December 23 listed XRP at $0.2586, with a reported market capitalization of $11.74 billion and approximately $19.79 billion of trailing 24-hour volume. The snapshot ranked XRP fourth among listed cryptoassets and reported a 42.33% decline over its rolling 24-hour measurement window.

Those figures describe CoinMarketCap’s cross-venue aggregate at its snapshot time. They are not an official closing auction, a single-exchange XRP/USD candle or a calendar-day return. Crypto trades continuously, and venue composition, timestamp conventions, liquidity and data revisions can produce different values. The timing is consistent with a sharp repricing around the SEC action, but the aggregate data cannot isolate how much of the move was caused by Bitwise’s sale, other institutional decisions or broader selling.

Why the removal mattered

The consequential development on December 23 was not the size of one disclosed allocation. It was the speed with which legal uncertainty entered an institutional product’s eligibility process. Bitwise acted before a judicial ruling because its methodology treated securities-law risk itself as material.

That created a practical separation between a token remaining operational on its ledger and the token remaining acceptable inside a U.S.-facing investment product. It also showed that regulatory complaints could affect index membership, fund mandates and market access without requiring an immediate technical change to the underlying protocol.

Later confirmation and limits

Bitwise’s December 31 reconstitution report later confirmed that XRP exited the index at 4:00 p.m. Eastern Time on December 23. That record clarifies the implementation time but does not supply the fund’s missing trade details or resolve the SEC’s allegations. Those questions remained open in the event-date record.