Brad Garlinghouse, CEO of Ripple, has strongly criticized the Securities and Exchange Commission (SEC) for its approach to regulating cryptocurrencies, which he referred to as “regulation by enforcement.”
Garlinghouse argued that the SEC’s overreach and lack of clear legal jurisdiction have resulted in negative consequences for retail investors. He called for legislation to establish clear rules and protect retail participants in the crypto industry.
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An important topic has come up about protecting retail. The SEC created this mess by proclaiming it was the cop on the crypto beat when it had no legal jurisdiction Where’s that gotten us? Consumers left holding the bag in bankruptcy court while the SEC holds press conferences.
— Brad Garlinghouse (@bgarlinghouse) July 22, 2023
Ripple Labs Case and Potential SEC Appeal
Garlinghouse’s criticism of the SEC was triggered by the regulatory body’s comments that hinted at the possibility of appealing the split-decision ruling against Ripple Labs. The SEC expressed its dissenting views in the case against Do Kwon, the founder of Terraform Labs.
According to the SEC, the court’s ruling that retail sales of XRP on exchanges did not constitute a security was incorrect. The SEC lawyers asserted that these sales should have been classified as securities.
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Garlinghouse’s Response to SEC’s Comments
Brad Garlinghouse strongly rebuked the SEC’s comments, describing them as “absurd.” He rejected the notion of blaming the judge for applying the law and emphasized the need for legislative action to provide clarity in the crypto industry.
Brad Garlinghouse noted
“It’s absurd to blame a Judge for faithfully applying the law. We all know legislation – not more regulation by enforcement – is the only way forward to provide clear rules and protect retail. Glad to see more members of Congress like @RepRitchie, @PatrickMcHenry champion this.”
Garlinghouse’s criticism highlights his belief that regulation should be based on well-defined legislation rather than the SEC’s enforcement-driven approach.
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Ripple Labs Chief Legal Officer’s Comparison
Stuart Alderoty, the Chief Legal Officer of Ripple Labs, joined Garlinghouse in voicing his concerns. He made a comparison between explaining that XRP is not a security and convincing a flat earther that the world is round.
Alderoty’s analogy suggests that the debate over XRP’s classification as a security should be self-evident, similar to the shape of the Earth.
Talking to someone who still doesn’t understand that the token itself is not the security is like explaining to a flat earther that the world is round.
— Stuart Alderoty (@s_alderoty) July 22, 2023
SEC’s Disappointment and Continued Evaluation
SEC Chair Gary Gensler expressed disappointment with the court’s ruling on the securities status of XRP. However, he confirmed that the SEC would continue to assess the decision. Gensler’s remarks imply that the regulator will closely monitor the legal landscape surrounding XRP and may pursue further action.
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