Former US Securities and Exchange Commission (SEC) Chair Jay Clayton’s comments about the agency’s regulatory strategy drew harsh criticism from Ripple CEO Brad Garlinghouse. The SEC has launched a number of regulatory actions against cryptocurrency exchanges and businesses since the first quarter of 2023.
On June 29, 2023, Clayton shared his opinion with CNBC, saying that the SEC ought to take legal action against particular businesses only in cases where there are solid legal justifications. He underlined that laws and cases that regulatory bodies think will hold up to court scrutiny should be introduced.
The former SEC chair filed a lawsuit that had little chance of success in court, the Ripple CEO pointed out, in light of the SEC’s decision to dismiss the allegations without prejudice. The SEC accused Ripple, Garlinghouse, and co-founder Christian Larsen of conducting a “unregistered, ongoing digital asset securities offering” in December 2020. The lawsuit claimed that the company had raised over $1.3 billion through the sale of the XRP token.
Garlinghouse said “As a reminder, Jay Clayton brought the case against Ripple, me and Chris Larsen. And left the building the next day.”
Clayton statements in June 2023 that have come to light because of the latest developments in the lawsuit involving Garlinghouse and Larsen. The SEC filed a motion in October to have the charges against the executives dismissed, as was previously reported.
The SEC’s action comes after Judge Analisa Torres’ July decision, which found that retail sales of the XRP token did not fit the legal definition of a security and partially ruled in favor of Ripple. But the court determined that by selling XRP tokens directly to institutional investors, Ripple had broken securities laws.