Brad Garlinghouse answers questions on Twitter about the SEC’s lawsuit about XRP sales.
The SEC filed a lawsuit against Ripple Labs in December 2020, the lawsuit is also against co-founder Christian Larsen and incumbent CEO Brad Garlinghouse.
The lawsuit alleges that Ripple raised $1.3B in unregistered securities offerings since 2013. Security is an investment contract; if the creators of a cryptocurrency advertised it as an investment to US buyers, then the SEC considers the coin to be a security under US law.
According to Garlinghouse, his firm has tried to settle with the SEC.
In a statement, the CEO mentioned that Ripple intends to fight back: “The SEC is fundamentally wrong as a matter of law and fact. XRP is a currency and does not have to be registered as an investment contract. The Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.”
XRP was issued in 2012. The SEC believed that XRP is a security and should have been registered with the Commission as what it is. Ripple holds 6.4B XRP. It sells the cryptocurrency to the public from a security account that holds another 48B.
However, it wasn’t successful.
Last December, the SEC filed a $1.3B lawsuit against Ripple, Garlinghouse, and Chris Larsen for the role in selling XRP.
The SEC stated in a press release, “The defendants failed to register their offers and sales of XRP or satisfy an exemption from registration, in violation of the registration provisions of the federal securities laws.”
In a Twitter thread, Garlinghouse referred to Ripple’s attempt to settle the lawsuit, saying, “Can’t get into specifics, but know we tried—and will continue to try [with] the new administration—to resolve this in a way so the XRP community can continue innovating, consumers are protected and orderly markets are preserved.”
He also attempted to answer questions about if Ripple had paid exchanges to list XRP, stating,
“Ripple has no control over where XRP is listed, who owns it, etc.”
His answer wasn’t enough for many observers, including Anderson Kill partner Hailey Lennon, who responded,
“So is that a no?”
Many questions remain. And Ripple will answer them soon. A pre-trial conference is scheduled for next month. Regarding why Ripple hasn’t yet responded to the SEC, he stated,
“The legal process can be slow! Things may seem quiet, but plenty is happening behind the scenes. We’ll be filing our initial response within weeks.”
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