In December 2020, the United States Securities and Exchange Commission (SEC) filed a lawsuit against one of the world’s biggest crypto firms, Ripple Labs Inc and two of its executives, who are also large security holders.
Allegedly, raising more than $1.3 billion by selling digital asset securities without registration.
On Thursday, Brad Garlinghouse, the CEO of Ripple, criticised the SEC over its conflicting, foisted regulations on crypto firms.
“The SEC [decided] to do regulation through enforcement, which is not efficient and really I think has stifled innovation in the United States,” said Brad Garlinghouse.
At the Collision conference in Toronto, Garlinghouse brought up Ripple’s legal battle with the SEC. They were accused of having sold $1.4billion XRP tokens as part of an “unregistered, ongoing digital asset securities offering.”. Garlinghouse also made mention of SEC’s approval of Coinbase’s IPO in April 2021. Even though listing ripple’s native token (XRP) at the time too.
On this, Garlinghouse said: “The SEC now seems to take the position when they sued us that ‘XRP is a security and always has been’, but they approved Coinbase going public even though Coinbase is not a registered broker-dealer.”.
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“There’s some contradictions here of the SEC, almost not, within its organization, knowing left hand, right hand.”
He added: “The SEC, instead of doing the hard work to define a new set of clear rules, a new set of clear regulations […] they instead decide we’re going to do regulation through enforcement, which is not efficient and really I think has stifled innovation in the United States.”
Before and after the SEC filed its lawsuit against Ripple in 2020. Garlinghouse, co-founder Chris Larsen, and the chief technology officer, David Schwartz all had complaints about U.S. regulators. Larsen said in October 2020 that Ripple might leave the U.S. as they have a policy of “regulation through enforcement.”
“I don’t think [crypto is] the Wild West at all,” said Garlinghouse, in response to SEC chair Gary Gensler’s characterization of the space. “I think crypto certainly is a volatile asset class […] All asset classes have a certain volatility — I don’t think it’s a regulator’s job to determine how that volatility should be accessed by consumers, by businesses.”
The court case between Ripple and the SEC is still going on. Many expect the outcome to set a standard for how cryptocurrencies will regulate in the United States.
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