Ripple CEO remains confident of victory over SEC. Brad Garlinghouse is the CEO of Ripple, the company behind the XRP coin. In an interview for CNBC on September 23, 2022, he spoke about the legal dispute between Ripple and the SEC, Securities and Exchange Commission. Back to his biting statements.
SEC vs Ripple: a public dislike since December 2020
It was in December 2020 that the SEC officially launched its offensive against Ripple Labs. At the time, the SEC accused the company and two of its executives of “raising more than $1.3 billion through a continuous, unregistered digital asset securities offering.”
For the SEC, the XRP coin is therefore financial security. Ripple is accused of failing to follow securities regulations when issuing its XRP tokens.
For its part, Ripple defends itself by arguing that XRP is a cryptocurrency, in the same way as Bitcoin and that therefore the regulatory framework in question should not apply.
Since then, the standoff has been going on between Ripple and the SEC. Ripple is said to have already spent over $100 million defending it. For Ripple CEO Brad Garlinghouse, the facts are very clear and he is absolutely confident of winning his case.
“No investment contract” for Gary Garlinghouse.
On September 23, Brad Garlinghouse spoke on the set of Crypto World on CNBC. For him, there is not even an investment contract, which is however the first requirement for XRP to be considered financial security.
“The law requires that there be an investment contract, it's the first step before going to the Howie test that we often talk about. There has to be a contract between the two parties. We don't even think we've taken that step." Brad Garlinghouse
Garlinghouse claims that no investment contract can be found since the overwhelming majority of XRP transactions are completely independent of Ripple.
“To have a contract, you need two parties. No matter how the SEC wants to twist the facts, the reality is that to have a contract, two parties have to agree on something. (…) Ripple does not know the people who bought the XRP, the people who bought the XRP do not necessarily know Ripple. You have to remember that 99.9% of XRP trading has nothing to do with the Ripple company." Brad Garlinghouse
According to him, therefore, the XRP coin cannot be financial security.
“So when you say, okay, 'XRP is a financial security,' I'm going back to something I said years ago when they started: A security from which company? Who is the owner?"
After the question about the investment contract, the CEO returned to the famous “Howie Test”. Again, he claims that XRP in no way fulfills the 3 conditions that would make the coin financial security.
Ripple boss blasts SEC.
Also in this interview with CNBC, Brad Garlington lamented the lack of regulatory clarity that hangs over the United States in terms of cryptocurrency.
“The vast majority of people I know in the industry want to follow the rules of the road. But we need to clarify what the rules of the road are here in the United States." Brad Garlinghouse
Ripple's CEO looked back on his early days in tech in the 90s. At that time, the rules around the internet were made clear, which allowed companies and investors to flock to the country.
Garlinghouse expressed regret that this work was not done in the case of crypto, and he took the opportunity to point the finger at the SEC.
“The SEC tries to regulate by enforcement. It's a very inefficient way of doing things, instead of “let's do the work, provide the clarity”. Brad Garlinghouse.
Garlinghouse also claimed that the SEC is trying to degrade the confidence of crypto businesses via lawsuits.
“I would say the SEC has built a reputation that I think it deserves as a bully. Many actors the SEC has gone after simply had to fold their cards” Brad Garlinghouse
Towards an accelerated procedure?
On September 13, Ripple and the SEC both filed motions in New York seeking a summary judgment, claiming that the judge handling the case had enough information to make a decision without bringing the case to trial.
“We have been very insistent that this file be dealt with quickly, partly because we believe the law is clear and partly because we believe that the whole sector needs the clarity that we are looking for." Brad Garlinghouse
The SEC vs Ripple case will therefore probably not go to trial since the two parties do not disagree on the facts. Rather, the question is how the law should be interpreted and applied.
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