New XRP ETF Filing Sounds Alarm on Whale Manipulation Threats

Wall Street's latest crypto play comes with a built-in warning label.

MANIPULATION RISKS EXPOSED

The freshly filed XRP ETF documentation pulls no punches about vulnerability to large holders. Whale movements could trigger violent price swings that ripple through the entire fund structure.

REGULATORY SHADOW BOXING

SEC scrutiny hangs over the filing like a specter. The document acknowledges regulators' longstanding concerns about crypto market integrity while attempting to preemptively address them.

MARKET STRUCTURE FLAWS

Thin liquidity pools and concentrated ownership create perfect conditions for price distortion. The filing suggests even single-digit percentage moves by major holders could impact NAV calculations.

Because nothing says 'mature asset class' like warning investors about potential market rigging right in the prospectus.

A fresh ETF filing with the U.S. Securities and Exchange Commission (SEC) has flagged whale manipulation as a clear risk in the XRP market. The Cyber Hornet S&P500/XRP ETF prospectus notes that a small number of large holders control much of XRP’s supply. Their trades could sway prices and reduce market stability.

Attorney Bill Morgan said the filing is significant because an institutional applicant has acknowledged a risk often brushed aside in crypto circles. Many traders point to broader market forces or speculation to explain sharp moves. But Morgan argued that if an ETF sponsor shows whale activity in a formal SEC document, it should be treated as a genuine concern.

The prospectus filed with the SEC for the Cyber Hornet S&P500/XRP ETF gives an assessment of the risk to investors in the ETF in respect of the XRP component.

One of the risks mentioned is manipulation by XRP whales

It is surprising that often when people raise the issue of… pic.twitter.com/twdpkCGoo8

The filing also detailed XRP’s structural risks. Since its entire supply was created at launch, XRP cannot expand to meet rising demand. Without mining or staking rewards, validators secure the network without new issuance. This setup makes XRP different from assets like Bitcoin and Ethereum, but it also adds to liquidity challenges and volatility.

By identifying whale manipulation as a material risk, the ETF filing may influence how regulators, institutions, and investors approach crypto markets. It could mark a step toward greater transparency and a more open discussion about the realities of trading digital assets.

“If an institutional applicant for an EFT acknowledges the risk of whale manipulation then it should be considered a real risk. Personally if people are not prepared to acknowledge the possible risk of some market manipulation in crypto, I wonder whether they should invest in the space at all,” Morgan said.