Ripple CEO Brad Garlinghouse believes the United States Securities and Exchange Commission (SEC) will face a prolonged process before having the chance to appeal the ruling in its case against Ripple Labs.
On July 13, U.S. district court Judge Analisa Torres ruled partially in favor of Ripple in a case brought by the SEC in 2020, ruling that the XRP (XRP) token is not a security when sold on retail digital asset exchanges.
However, Torres also ruled that XRP is a security when sold to institutional investors, as it meets the conditions set in the Howey test.
In an interview with Bloomberg on July 15, Garlinghouse dismissed the institutional sales decision as “the smallest piece” of the lawsuit. He believes if the SEC were to file an appeal against the retail sales ruling, it would only further solidify the decision that Torres made.
Although Garlinghouse believes it could be a while before the SEC has the possibility to file an appeal:
“As a matter of law, the law of the land right now is that XRP is not a security. 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 “crypto case.“ He called out the SEC for being “a bully” and going after players in the crypto industry who couldn’t “mount a proper defense.”
He also noted that when the case against Ripple was first filed, a lot of the crypto exchanges in the U.S. had the attitude of waiting to “see what happens” due to uncertainty. This resulted in several exchanges, such as Coinbase and Kraken, delisting XRP altogether.
The SEC “sowed confusion” in the market, according to Garlinghouse.
“They knew there was confusion, and they actually did things that they knew would increase confusion,” he stated.
We said in Dec 2020 that we were on the right side of the law, and will be on the right side of history. Thankful to everyone who helped us get to today’s decision – one that is for all crypto innovation in the US. More to come.— Brad Garlinghouse (@bgarlinghouse) July 13, 2023
Garlinghouse explained that this confusion actually “masqueraded as power” to the SEC, thus preventing innovation within the United States.
“The SEC has been trying to put power and politics over what is really just sound policy and providing clear rules of the road,” he stated.
He pointed out that this has made it difficult for entrepreneurs and investors to participate in the U.S. crypto market and blockchain industry.