In an interview with Ryan Selkis, founder of Messari Crypto, CEO of payments company Ripple Brad Garlinghouse spoke about XRP and its legal battle with a US regulator. The interview took place at Mainnet 2022, an event organized by the chain’s research company.
In late 2020, the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and Garlinghouse for the alleged offering of an unregistered security. During the interview, Garlinghouse tried to talk about some of the facts that may have led to the lawsuit, while giving his view on the regulator’s approach.
Ripple CEO: SEC Has Gone ‘Cuckoo For Cocoa Puffs’
According to Garlinghouse, Ripple was involved in meetings with the SEC long before they filed the lawsuit. In 2018, the company participated in “innovation groups” to engage with the regulator and expand its knowledge of XRP and cryptocurrencies.
At the time, Garlinghouse participated in the initiatives without legal representation. During these meetings, “there was never a suggestion that XRP is a security”. Garlinghouse called these meetings “constructive”.
In 2019, the company received a letter from the regulator about an “informal” investigation of XRP. This eventually led to the lawsuit and the confrontation between the payment company and the regulator.
Speaking about their legal expenses to carry out their fight against the SEC, Garlinghouse had this to say, while arguing that many crypto projects and companies may lack the funds to defend themselves:
I think the SEC has been a bit of a bully in the whole industry, we will spend well and into a hundred million dollars defending ourselves against the SEC.
Does the SEC act with malice?
According to the judge in charge of the case between the SEC and Ripple, the regulator acted with “hypocrisy” and “failed to faithfully adhere to the law”.
Furthermore, Garlinghouse classified the current approach of the SEC, under the leadership of Gary Gensler, as “crazy”. The current SEC chairman has stated on several occasions that “most cryptocurrencies” can be securities and fall under their oversight, with the exception of Bitcoin.
The Ripple CEO said the following about the regulator’s approach, and probably the most important difference, from his position, which separates XRP from a security:
The idea that now everything under Gary Gensler’s view is a certainty, it’s crazy talk (…). The Securities Act of 1939 describes a security as an investment contract (…). The point we are making is that there is no investment contract. Ripple the company, and Brad Garlinghouse the individual, I did not enter into any contract with anyone who bought XRP.
At the time of writing, XRP’s price is trading at $0.4 with a gain of 9% in the last 24 hours and a gain of 48% in the last week. The market has reacted positively to a potential positive outcome from the legal battle against the SEC and appears to be pricing in a settlement between the parties.