In the aftermath of the landmark ruling of the SEC lawsuit against Ripple Labs, Ripple’s CEO Brad Garlinghouse addressed the situation in an interview with Bloomberg TV on July 14, 2023. His insights provide a broader perspective on the effects of the ruling and its implications for the entire cryptocurrency industry.
To recap, the lawsuit initiated by the SEC in December 2020 alleged that Ripple Labs and its executives Bradley Garlinghouse and Christian A. Larsen unlawfully offered and sold securities, contravening Section 5 of the Securities Act of 1933. After a series of hearings and deliberations, Judge Analisa Torres, a district judge at the United States District Court for the Southern District of New York, gave her ruling on July 13, 2023.
While speaking with Matt Miller and Jon Erlichman on “Bloomberg Markets,” he ironically pointed out that the SEC’s mission statement is all about protecting investors. He criticized the SEC for the lawsuit against Ripple and applauded the court’s ruling that sales of XRP through exchanges, its use for compensation, and its use for ecosystem incentives do not amount to sales of investment contracts.
The Ripple CEO highlighted that a significant majority (95%) of Ripple’s customers are outside the U.S., emphasizing that this is where their customer demand lies. He opined that the U.S. is losing ground in the crypto industry due to the SEC’s focus on “power and politics” over “sound policy.” The lawsuit against Ripple, he suggested, exemplifies an attempt by the SEC to put unclear and arbitrary rules ahead of the industry’s need for clarity and guidance.
Discussing the potential for an SEC appeal, Garlinghouse was confident. He said as things stand XRP is not deemed a security by the ruling. He predicted that an appeal process would likely take years and expressed optimism that if the SEC were to file an appeal, it would only further solidify the court’s decision. The CEO bluntly stated, “the law of the land right now is an XRP is not a security.”
Garlinghouse criticized the SEC’s overreaching stance that virtually all cryptocurrency offerings are securities, pointing out that the ruling against this belief is a clear statement to the contrary.
The Ripple CEO concluded that this verdict benefits Ripple and the entire cryptocurrency industry. He attributed the positive response from the crypto industry in the 24 hours following the ruling to this broad impact.