Ripple CEO Describes Battle With SEC as Going ‘Exceedingly Well’

Key Insights:

• Brad Garlinghouse commented on the court case at the Paris Blockchain event.
• Losing the SEC battle would be very bad for crypto in the U.S., he added.
• The SEC alleges that the firm failed to register for its XRP securities sale.

Ripple CEO Brad Garlinghouse remains confident that his firm will get a result in the ongoing legal battle with the SEC. Speaking to CNBC at the Paris Blockchain Week event, he said:

“The lawsuit has gone exceedingly well and much better than I could have hoped when it began about 15 months ago,”

He added that the wheels of justice move slowly, referring to the drawn-out nature of legal battles and the associated bureaucracy in the United States.

Live from #PBWS2022, @bgarlinghouse sat down with @cnbc's @ryan_browne_ to talk crypto regulation, Ripple's global traction and use cases that he sees growing across the industry. pic.twitter.com/ouQYhY3B5n

— Ripple (@Ripple) April 14, 2022

Security or not Security

The San Francisco fintech firm has been embroiled in a court battle with the U.S. regulator for more than a year. The SEC alleges that the company, Garlinghouse, and executive chairman Chris Larsen engaged in an illegal securities offering through sales of its native token XRP.

The SEC uses the Howey Test, which refers to a U.S. Supreme Court case, to determine whether a transaction qualifies as an “investment contract” and would be considered a security.

It alleges that Ripple sold these securities (XRP tokens) without registering with the regulator first. Garlinghouse and company argue that XRP is a digital currency, just like Bitcoin (BTC) and Ethereum (ETH), which have not been considered securities. He said that there was a lot at stake if they did not win:

“This case is important, not just for Ripple; it’s important for the entire crypto industry in the United States. It would really be negative for crypto in the United States.”

Crypto exchanges offering XRP trading would also have to register with the SEC as a securities broker, which he described as additional friction. “If you determine XRP as a security of Ripple, we have to know every person that owns XRP,” he added.

Ripple secured a victory in the ongoing battle this week when a judge ruled that the SEC could not edit the contents of emails alleging there were conflicts of interest regarding how the regulator dealt with XRP and other tokens.

XRP Price Outlook

XRP prices are up 3.4% on the day and are currently changing hands for $0.759 at the time of writing. However, the token has dropped 7% over the past fortnight as crypto markets have retreated. XRP is currently down 78% from its January 2018 all-time high of $3.40.

It is the sixth-largest crypto asset with a market capitalization of $36.5 billion.