Gary Gensler is a hammer and everything looks like a nail: Ripple CEO Brad Garlinghouse
|- Ripple CEO Brad Garlinghouse told Bloomberg in an interview that the US government has unlimited resources to keep fighting a fight they have lost.
- Garlinghouse admitted that Ripple has already spent $100 million in defending the firm against SEC’s allegations.
- XRP price is winding below the $0.50 level as the SEC’s interlocutory appeal on the court ruling approaches.
Ripple executive Brad Garlinghouse commented on the lawsuit with the Securities & Exchange Commission (SEC) and the upcoming interlocutory appeal of the agency on Tuesday. Garlinghouse told Bloomberg that it is a very frustrating process and that Ripple has spent over $100 million on the lawsuit already.
The Ripple CEO expressed his discontent with Gensler’s bearish stance on the crypto asset class.
Also read: XRP price reverses all gains since Judge Torres ruling as Ripple holders sentiment turns negative
Ripple executive responds to Gensler’s testimony
SEC Chairman Gary Gensler recently testified before the United States Senate Committee on Banking, Housing, and Urban Affairs on September 12, 2023. Garlinghouse told Bloomberg that he is yet to watch Gensler’s testimony. The Ripple CEO heard about the testimony and said that it is very frustrating.
The firm has moved 80% of its hiring outside the US. The SEC’s bearish stance on crypto and directing firms to register does not mean that the supported assets are securities. He explained how the judge who ruled in the case said that XRP is not a security and the court moved in Ripple’s favor.
The Bloomberg interview asked Garlinghouse for his comments on Gary Gensler's bearishness on crypto. Garlinghouse was quoted as saying:
Gary Gensler is a hammer and everything looks like a nail.
The CEO is concerned that the government has unlimited resources to keep fighting firms like Ripple, dragging the lawsuit through motions for interlocutory appeal. Ripple has spent nearly $100 million in litigation, defending against the SEC’s allegations.
At the time of writing, XRP price is $0.4782, yielding a 5.4% loss for holders over the past week.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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