Ripple CEO Brad Garlinghouse recently shared his perspective on the ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), predicting a drawn-out appeal process. His insights were shared during a discussion with Bloomberg on July 15, 2023.
On July 13, a court ruling partially sided with Ripple Labs in a lawsuit brought by the SEC in 2020. The court’s decision established that Ripple’s XRP token does not constitute a security in relation to retail sales on digital asset exchanges. However, the ruling also clarified that XRP does meet the definition of a security when sold to institutional investors, as per the Howey Test.
Despite the ruling on institutional sales, Garlinghouse expressed that this aspect of the lawsuit was of minor significance. He suggested that any SEC attempt to appeal the retail sales ruling would only reinforce the court’s initial decision.
Garlinghouse also voiced criticism of the SEC’s tactics, likening them to a bully targeting less powerful entities in the crypto industry who lacked the resources for a robust defense. He pointed out that the Ripple lawsuit marked a first-time setback for the SEC in a cryptocurrency-related case.
The Ripple CEO observed that the SEC’s lawsuit initially led to a climate of uncertainty among U.S. crypto exchanges, promoting a cautious, wait-and-see attitude due to market confusion. He suggested that the SEC intentionally fostered this confusion to consolidate its power, which in turn stifled U.S. innovation.
Garlinghouse argued that the SEC’s focus on power and politics has eclipsed the need for sound policy and clear regulatory guidelines. He believes this approach has deterred U.S. entrepreneurs and investors from fully engaging with the crypto market and blockchain technologies.
The wider implications of the Ripple case underscore the need for regulatory clarity in the crypto industry.