Ripple CEO Brad Garlinghouse remains confident that the United States Securities and Exchange Commission (SEC) will face a lengthy process before having the opportunity to appeal Judge Torres’ favorable ruling in the case against Ripple. On July 13, Judge Torres ruled in favor of Ripple Labs in a case brought forth by the SEC in 2020, stating that the XRP token is not a security in terms of retail sales on digital asset exchanges. However, Torres determined that XRP is a security when sold to institutional investors, as it met the conditions set in the Howey Test.
In an interview with Bloomberg on July 15, Garlinghouse expressed his belief that the institutional sales aspect is “the smallest piece” of the lawsuit. He stated that if the SEC were to file an appeal against retail sales, it would only further solidify Judge Torres’ decision. Garlinghouse pointed out that it could be a considerable amount of time before the SEC is able to file an appeal, saying, “Until there is an opportunity for the SEC to file an appeal, which would take years, frankly we are very optimistic.”
Garlinghouse emphasized that this is the first time the SEC has lost a cryptocurrency case. He attributed the SEC’s previous successes to its targeting of “weak players” who couldn’t mount a proper defense. When the case against Ripple was initially filed, many U.S. crypto exchanges adopted a wait-and-see approach due to uncertainty. Garlinghouse attributed this uncertainty to the confusion sowed by the SEC in the market. He stated, “They knew there was confusion, and they actually did things that they knew would increase confusion.”
According to Garlinghouse, this confusion has acted as a barrier to innovation in the U.S. He accused the SEC of prioritizing power and politics over sound policy and providing clear rules of the road for entrepreneurs and investors to participate in the crypto and blockchain market. He expressed his hope for the SEC to shift its focus towards fostering innovation and creating a favorable environment for the growth of the cryptocurrency industry.
Overall, Garlinghouse’s sentiments reflect confidence in the favorable ruling by Judge Torres and a belief that the SEC will face challenges in its potential appeal process. He remains optimistic that this ruling will mark a turning point and foster a more supportive environment for the crypto industry in the U.S.