Crypto

Ripple CEO Optimistic Crypto Firm Will Get Ruling on XRP Lawsuit Soon, Says ‘Embarrassing’ SEC

The head of cryptocurrency and blockchain firm Ripple, Brad Garlinghouse, has said he hopes a resolution will be found in his spat with the United States Securities and Exchange Commission in the first half of 2023. .

“Judges are taking the time it takes for judges,” Garlinghouse, who is a defendant in the legal drama, said in an interview with CNBC’s “Squawk Box Europe” Wednesday at the World Economic Forum in Davos, Switzerland. “We are optimistic that this will certainly be resolved in 2023, and perhaps [in] the first half. So we’ll see how it goes from here. But I feel very good where we are with respect to the law and the facts.”

The United States Securities and Exchange Commission filed a lawsuit against Ripple in 2020, alleging that the company and its executives illegally sold XRP – a cryptocurrency created in 2012 – to investors without first registering it as a security.

Ripple disputes this assertion, saying the token should not be viewed as an investment contract and is used in its business to facilitate cross-border transactions between banks and other financial institutions.

In December, Ripple and the SEC submitted their latest set of briefs seeking summary judgment in the case, accusing each other of stretching the law respectively.

The judge could make a decision in favor of one or the other of the parties, avoiding a trial, or submit the case to a jury.

Ripple CEO Brad Garlinghouse speaks at the Milken Institute Global Conference in Beverly Hills, California on October 19, 2021.

Kyle Grillot | Bloomberg | Getty Images

Garlinghouse said he expects a decision to come “in the next few single-digit months” – potentially as early as June. He added that he does not expect the company to settle the case, although he remains open to the prospect.

“We’ve always said we’d like to settle, but it requires one very important thing, and that’s that going forward, it’s clear that XRP is not a security,” Garlinghouse said. “The SEC and Gary Gensler have been very outspoken that he views almost all crypto as security. And so that leaves very little room in the Venn diagram for settlement.”

At a September event hosted by the Practicing Law Institute, Gensler said that the “vast majority” of cryptocurrency tokens are securities.

He then hinted that ether could also be considered a security. Without referring to it by name, Gensler told reporters in September that crypto “staking” mechanisms – which reward users who deposit their tokens to secure blockchain networks with interest-like payments – should be considered securities offerings, since “the investing public anticipates profits based on the efforts of others. Ethereum, the network behind the world’s second-largest cryptocurrency, transitioned to such a model last year.

The only cryptocurrency the agency has made clear it doesn’t consider a security is bitcoin. Gensler previously said the world’s largest cryptocurrency has “no group of individuals in the middle,” meaning investors aren’t “betting” on a middleman.

Ripple CEO: 2022 will go down as one of the worst years for crypto

The XRP affair has significant implications for both Ripple and the broader crypto market.

A judgment declaring XRP a security could potentially place much stricter restrictions on Ripple with respect to the token. This could include requirements for transparency and increased investor protection, similar to those imposed on regulated brokers.

It may also set a precedent for the broader crypto space, setting a precedent for dozens of other crypto and blockchain projects that could potentially be classified as securities.

Underscoring the importance of the outcome of the lawsuit, Garlinghouse said on Wednesday, “What I’ve heard repeatedly here in Davos is how important this is not just for Ripple…but also, really, for the entire crypto industry in the United States.”

He added, “I keep reminding people that outside of the US, crypto is still booming, Ripple is still booming, and we need to make sure we continue to engage as well. non-US regulators.”

“Embarrassing” behavior

In a separate fireside chat with CNBC’s Arjun Kharpal on Wednesday, Garlinghouse harshly chastised the SEC’s legal battle with his company, saying the watchdog’s conduct so far has been “embarrassing.”

“From the start, I thought it was very clear that the facts were on our side, the law was on our side,” he said. “And I think as you’ve seen this unfold, as you’ve seen the documents filed in court, that the judge certainly hears our arguments.”

Ripple CEO: SEC behavior in XRP lawsuit was

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