Ripple CEO Brad Garlinghouse believes that the United States Securities and Exchange Commission (SEC) will face a lengthy process before it has the opportunity to appeal the ruling in its case against Ripple Labs. On July 13, U.S. district court Judge Analisa Torres delivered a partial victory to Ripple, ruling that the XRP token is not a security when sold on retail digital asset exchanges. However, Torres also ruled that XRP is a security when sold to institutional investors, based on the conditions set in the Howey test.
In an interview with Bloomberg on July 15, Garlinghouse downplayed the significance of the institutional sales decision, stating that it is “the smallest piece” of the lawsuit. He believes that if the SEC were to file an appeal against the ruling on retail sales, it would only further solidify Judge Torres’ decision. Garlinghouse expressed optimism about the current state of XRP, saying, “As a matter of law, the law of the land right now is that XRP is not a security. Until there is an opportunity for the SEC to file an appeal, which would take years, frankly, we are very optimistic.”
Garlinghouse pointed out that this is the first time the SEC has lost a “crypto case.” He criticized the SEC for targeting players in the crypto industry who couldn’t mount a proper defense, labeling them as bullies. He also noted that when the case against Ripple was first filed, many crypto exchanges in the U.S. took a wait-and-see approach due to uncertainty, resulting in the delisting of XRP on platforms such as Coinbase and Kraken.
According to Garlinghouse, the SEC created confusion in the market and intentionally took actions that would increase confusion. He stated, “They knew there was confusion, and they actually did things that they knew would increase confusion.” This confusion, he believes, masked as power for the SEC and hindered innovation in the United States.
Garlinghouse criticized the SEC’s focus on power and politics instead of sound policy and clear rules of the road. He argued that this approach has made it difficult for entrepreneurs and investors to participate in the U.S. crypto market and blockchain industry.
The ruling in favor of Ripple has been seen as a significant development in the crypto industry. Garlinghouse took to Twitter to express his gratitude, saying, “We said in Dec 2020 that we were on the right side of the law and will be on the right side of history. Thankful to everyone who helped us get to today’s decision – one that is for all crypto innovation in the US. More to come.”
Overall, Garlinghouse remains optimistic about the current situation and believes that it will be a while before the SEC has the chance to file an appeal. He sees this ruling as a watershed moment and hopes it will contribute to the establishment of clear regulations that foster innovation in the crypto industry.
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