In a recent fireside chat with CNBC’s Dan Murphy at the Dubai Fintech Summit, Ripple CEO Brad Garlinghouse revealed that the company will have spent $200 million defending itself against a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) by the time the case is over. The SEC accuses Ripple, Garlinghouse, and co-founder Chris Larsen of breaching U.S. securities laws by selling XRP, a cryptocurrency closely associated with Ripple, without first registering it with the regulator. Ripple maintains that XRP should be considered a digital currency rather than a security.
SEC’s pursuit of enforcement in the crypto industry
The SEC has also pursued enforcement action against other companies in the crypto industry, including Kraken and Coinbase. The watchdog required Kraken to stop offering its staking service that offers users interest-like yields on their tokens after settling charges that it sold unregistered securities. Meanwhile, the regulator has notified Coinbase that it plans to sue the company over alleged securities violations. The actions taken by the SEC have caused concern within the crypto industry, with some warning that it may force companies outside the U.S.
Garlinghouse believes that the SEC’s actions are contradictory, citing video footage of Chairman Gary Gensler, as a professor at MIT, saying that 75% of digital assets are commodities, but now claiming that they are all securities. He believes that Gensler is seeking power and putting it ahead of sound policy to grow the U.S. economy. However, an SEC spokesperson declined to comment on the ongoing litigation.
The SEC’s actions in the crypto industry involve the application of existing regulations, which were formed several decades before the industry emerged. Ripple maintains that XRP is a digital currency and not a security, but the case is ongoing.