Ripple CEO Brad Garlinghouse recently offered his thoughts on the current legal struggle with the Securities and Exchange Commission (SEC), forecasting a lengthy appeal process. On July 15, 2023, he discussed his findings with Bloomberg.
On July 13, a court verdict largely sided with Ripple Labs in a complaint filed by the SEC in 2020. The court’s decision established that Ripple’s XRP coin does not constitute a security in relation to retail sales on digital asset exchanges. However, according to the Howey Test, XRP meets the definition of a security when sold to institutional investors.
Despite the decision on institutional sales, Garlinghouse stated that this portion of the litigation was minor. He contended that any attempt by the SEC to appeal the retail sales finding would only serve to support the court’s initial conclusion.
Garlinghouse also criticised the SEC’s actions, comparing them to a bully preying on less powerful businesses in the crypto industry that lack the resources to mount a credible defence. He noted that the Ripple action was the SEC’s first setback in a cryptocurrency-related issue.
The Ripple CEO noticed that the SEC’s action originally created an atmosphere of uncertainty among US crypto exchanges, encouraging a cautious, wait-and-see mentality owing to market confusion. He claimed that the SEC purposely created this uncertainty in order to cement its control, stifling US innovation.
Garlinghouse claimed that the SEC’s concentration on power and politics has overshadowed the need for solid policy and clear regulatory norms. He argues that this approach has discouraged US entrepreneurs and investors from fully engaging with the crypto industry and blockchain technologies. The broader consequences of the Ripple case highlight the need for regulatory certainty in the cryptocurrency industry.