Ripple CEO Brad Garlinghouse shared his thoughts on the ongoing legal battle between his company and the U.S. Securities and Exchange Commission (SEC). He accused the SEC of being a bully and acting against the interests of the crypto industry and American innovation.
Garlinghouse claimed that Ripple has achieved a partial victory in the case, as the court denied the SEC’s request to access Ripple’s legal communications. He said that this was a “very important moment” for the case, as it showed that Ripple did not have fair notice from the SEC that XRP was considered a security.
He also criticized the SEC for its “regulation by enforcement” approach, which he said creates uncertainty and confusion for the crypto market. He argued that the SEC should provide clear and consistent guidance for the industry, instead of suing companies after the fact.
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The SEC accused Ripple in 2020 of illegally raising $1.3 billion through the sale of XRP. A judge on Thursday seemingly decided that XRP was not a security when sold on the secondary market but would be a security when sold to institutional investors. “The law of the land right now is that XRP is not a security,” Garlinghouse said on Bloomberg TV.
Garlinghouse reiterated that Ripple is committed to defending itself and its customers in court, and that it will continue to work with regulators and policymakers around the world to foster innovation and growth in the crypto space. He expressed his confidence that Ripple will prevail in the case, and that XRP will be recognized as a legitimate digital asset that benefits millions of users globally.
The SEC and Ripple could still appeal the judge’s decision. An appeal from the SEC could take years, Garlinghouse told Bloomberg. The court agreed with the SEC that the Howey test governs the securities analysis of crypto transactions and rejected Ripple’s made-up test as to what constitutes an investment contract, instead emphasizing that Howey and subsequent cases have held that a variety of tangible and intangible assets can serve as the subject of an investment contract.
Meanwhile, ex-Celsius CEO faces fraud charges, LinkedIn News reports.
Federal prosecutors have charged Alex Mashinsky, ex-CEO of bankrupt crypto exchange Celsius, with several counts of fraud connected to “a yearslong scheme to mislead customers” about Celsius’ financial stability, according to Bloomberg. Mashinsky, who was arrested Thursday, is also accused of market manipulation. Meanwhile, the company has agreed to a $4.7 billion civil settlement with the Federal Trade Commission — one of the largest settlements in FTC history, CNBC notes — but payment is suspended while Celsius pays back any remaining customer assets.
- The Securities and Exchange Commission and the Commodity Futures Trading Commission announced their own lawsuits against Mashinsky and Celsius Thursday.
- Roni Cohen-Pavon, Celsius’ chief revenue officer, has also been charged with fraud.
- Coinbase says its fight with the SEC received a boost after a judge ruled in a separate case Thursday that XRP token purchases via exchanges are not securities transactions.