Ripple was about to close its doors after the SEC sued the company in 2020. CEO Brad Garlinghouse said that the government has “unlimited power and resources,” and that fact alone made the decision to face challenges.
Garlinghouse shared the news in an appearance on KU School of Business. He walked the audience through what really happened, and why they still find parts of it difficult to accept.
Technology designed for payment, not stock ownership
XRP moves faster, costs less, and scales better, Garlinghouse said. This is why Ripple built its payment technology around it. He compared XRP to Bitcoin and not to a company’s stock. Nobody who buys XRP has a piece of Ripple. Ripple itself is still a private company. It raised venture capital in 2012, 2015, and 2016, and those fundraising rounds created real securities, shares that come with voting rights and corporate claims. XRP doesn’t work like that. Ripple has a lot of XRP, but it cannot control the token, because the network runs on open source code.
The SEC saw it differently. The organization stated that XRP was classified as a security, not a currency or an asset, and accused Ripple of selling unregistered securities.
Meetings that did not issue a warning
Garlinghouse said he met with SEC staff four times between 2017 and 2019. He did not bring a lawyer. “Why do I need a lawyer? Garlinghouse met with the SEC four times between 2017 and 2019 without a lawyer.
Not once, he said, did anyone at the SEC tell him they thought XRP could be a security. Garlinghouse says the SEC never gave him a warning that XRP was a security. Then in 2020, the organization sued the company and Garlinghouse personally, over the XRP he sold privately.
He called what followed disgusting, and even inappropriate. The SEC agreed to drop its case but not against Ripple itself, allowing it to remain private while it continues to pursue the company.
A war that lasted many years
The four-year battle with the SEC cost Ripple nearly 150 million dollars. Ripple won. The SEC has signed an appeal.
Everything changed after Trump won the election and appointed a new SEC chair. Garlinghouse said the new leadership adopted a more innovative approach to crypto, which he believes the industry needs if it wants to grow in the United States.
He compared it to the early internet. In 1996, the Telecom Deregulation Act gave telecommunications companies clear rules to build on, and this certainty brought investors. Crypto wanted the same, he said. Most people in the industry want to follow the rules. They just need someone to write first.
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