Ripple CEO Optimistic Crypto Firm Gets Judgment In SEC XRP Lawsuit Soon

Brad Garlinghouse, head of cryptocurrency and blockchain firm Ripple, hopes the dispute with the U.S. Securities and Exchange Commission will be resolved in the first half of 2023.

Court drama defendant Garlinghouse said in an interview with CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland on Wednesday, “Judges take time, but judges “We are optimistic that this will definitely be resolved in 2023, and perhaps [in] first half. So let’s see what happens from here. But I am very happy with the relative relationship between law and facts. ”

The U.S. Securities and Exchange Commission launched a lawsuit against Ripple in 2020, alleging that the company and its executives illegally sold it. XRP — A cryptocurrency created in 2012 — offered to investors without first being registered as a security.

Ripple refutes this claim, stating that the token should not be considered an investment contract and is used in business to facilitate cross-border transactions with banks and other financial institutions.

In December, Ripple and the SEC filed final briefs seeking summary judgment in the case, accusing each of them of widening the law.

Judges could either sidestep the trial and rule in favor of one side or pose the issue to the jury.

Garlinghouse said he expects a ruling “within the next single-digit months,” and could be as early as June. He added that he doesn’t expect the company to settle the lawsuit, but he remains open to the possibility.

“We’ve always said we want to settle, but that would require one very important thing: It’s clear that XRP will not be a security in the future,” Garlinghouse said. The SEC and Gary Gensler have said very outwardly that they view almost all cryptocurrencies as securities, so there’s very little space left in the Venn diagram for settlement.”

At a September event hosted by the Practicing Law Institute, Gensler said the “majority” of cryptocurrency tokens are securities.

He then hinted that Ethereum could also be admitted as a security. Without naming his name, Gensler told reporters in September that “investors expect profits, so cryptocurrency staking rewards users who deposit their tokens to protect the blockchain network.” ‘ said the mechanism should count as an offering of securities. based on the efforts of others. Ethereum, the network behind the world’s second-largest cryptocurrency, switched to such a model last year.

Bitcoin is the only cryptocurrency that the agency has clarified that it does not consider to be a security. Gensler has previously said that the world’s largest cryptocurrency “has no group of individuals in the middle”, implying that investors are not “betting” on intermediaries.

The XRP incident has important implications for both Ripple and the broader crypto market.

A ruling declaring XRP a security could impose even more stringent restrictions on Ripple with respect to the token. This could include requirements for transparency disclosure and increased investor protection, similar to those imposed on regulated broker-dealers.

It could also set a precedent for dozens of other cryptocurrency and blockchain projects that could be classified as securities.

Emphasizing the importance of the outcome of the lawsuit, Garlinghouse said on Wednesday, “What we heard repeatedly here in Davos is how important this is, not just for Ripple, but actually for the entire U.S. crypto industry.” Stated.

“I keep reminding people that cryptocurrencies are still thriving outside the US, and Ripple is still thriving. there is.”

In a separate debate with CNBC’s Arjun Kharpal on Wednesday, Garlinghouse lashed out at the legal battle between the SEC and his company, saying the watchdog’s behavior so far has been “embarrassing.”

“From the beginning, I thought it was very clear that the facts were on our side and the law was on our side.” So, I think the judge certainly heard our arguments.”

He continued, “The SEC’s actions in some of them were embarrassing as US citizens. You’re kidding, it’s just part of what’s going on.”

He said the US is “particularly absent” from the list of regulators developing crypto-friendly rules. In his view, the United Arab Emirates, Japan, Singapore, Switzerland and the UK are some of the pioneers in this regard.

As part of the legal proceedings, Ripple struggled to obtain documents related to a June 2018 speech by former SEC official Bill Hinman. In his speech, Hinman said a competing Ether sale was “not a stock exchange.”

XRP was once the third largest cryptocurrency, boasting a market capitalization of $120 billion in early 2018. Then, amid scrutiny by US regulators and a widespread recession for Bitcoin and other digital currencies, XRP plunged sharply. According to CoinMarketCap data, XRP’s market cap is currently around $20 billion.