- Ripple will have spent $200 million by the end of the SEC litigation, CEO Brad Garlinghouse said.
- The SEC accuses Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen of violating US securities laws by selling XRP without first registering it with the regulator.
- Garlinghouse said that Chairman Gary Gensler and other SEC officials have made statements in the past that contradict the regulator’s belief that XRP is a security.
Ripple CEO Brad Garlinghouse speaks during the Milken Institute Global Conference in Beverly Hills, California on October 19, 2021.
Kyle Grillot | Bloomberg | Getty Images
Ripple will have spent $200 million by the time it ends defending itself against a lawsuit brought by the Securities and Exchange Commission, CEO Brad Garlinghouse told CNBC on Monday.
“With the SEC, we will — this is the first time I’ve shared this publicly — by the time it’s all said and done, we’ll have spent $200 million defending ourselves against a lawsuit that was like this from the start, well.” , that doesn’t make much sense,” Garlinghouse said during a fireside chat with CNBC’s Dan Murphy at the Dubai Fintech Summit.
The SEC accuses Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen of violating US securities laws by selling XRP (a cryptocurrency closely related to Ripple) without first registering it with the regulator. Ripple denies the SEC’s allegations and maintains that XRP should be viewed as a digital currency rather than a security.
Ripple isn’t the only company the SEC has taken enforcement action against. The watchdog called on Kraken, a crypto exchange, to shut down its so-called staking service, which offers users interest-like returns on their tokens after paying fees for selling unregistered securities.
Meanwhile, the regulator has also informed crypto exchange Coinbase that it plans to sue the company over alleged securities violations. The crypto industry has been in turmoil over the actions taken by the SEC, with some figures warning it could force companies outside the US
Much of what the SEC has done is apply existing regulations to the crypto industry, which was formed several decades after the Howey Test — one of the most important tests used to determine whether something is a security or not.
Garlinghouse said that Chairman Gary Gensler and other SEC officials have made statements in the past that contradict the regulator’s belief that XRP is a security.
“You have video footage of the SEC chairman as a professor at MIT saying 75% of these digital assets are commodities,” he said. “And now he’s saying they’re all securities because he’s the head of the SEC and he wants power and puts power before sound politics to build an economy in the United States.”
The SEC was not immediately available for comment when contacted by CNBC.
In 2020, the US Securities and Exchange Commission launched a lawsuit against Ripple alleging that the company and its executives illegally sold XRP, a cryptocurrency that its founders created in 2012, to investors without first listing it as a security .
Ripple denies the claim, stating that the token should not be considered an investment contract and is used in its business to facilitate cross-border transactions between banks and other financial institutions.