Ripple nearly closed its doors after the SEC filed a lawsuit against the company in 2020. CEO Brad Garlinghouse said the government had “unlimited power and resources,” and that fact alone made the decision to fight back a difficult one.
Garlinghouse shared the story during an appearance on KU College of Business. He explained to the audience what really happened, and why he still found it difficult to accept parts of it.
Technology designed for payments, not stock ownership
XRP moves quickly, costs little, and scales well, Garlinghouse said. That’s why Ripple built its payment technology around it. He compared XRP to Bitcoin rather than the company’s stock. No one who buys XRP owns a piece of Ripple. Ripple itself is still a private company. It raised venture capital in 2012, 2015 and 2016, and those funding rounds created real securities, shares that come with voting and claim rights to the business. XRP doesn’t work that way. Ripple holds a large amount of XRP, but cannot control the token, because the network runs on open source code.
The SEC saw it differently. The agency said that XRP is considered a security, not a currency or a commodity, and accused Ripple of selling unregistered securities.
Meetings that did not raise any warning
Garlinghouse said he met with SEC staff four times between 2017 and 2019. He never brought a lawyer. “Why do I need a lawyer? I’m just telling you this is how we use this technology,” he said at the time. Garlinghouse met with the SEC four times between 2017 and 2019 without an attorney.
He said that not once did anyone at the SEC tell him that they thought XRP might be a security. Garlinghouse says the SEC never warned him that XRP was a security. Then in 2020, the agency sued the company and Garlinghouse personally, over XRP he sold as an individual.
He described what came next as abhorrent, even immoral. The SEC agreed to drop his own case but not the case against Ripple itself, and offered him a personal settlement while continuing to pursue the company.
A battle that lasted for years
This four-year legal battle with the SEC cost Ripple approximately $150 million. Ripple won. The SEC has indicated it will appeal anyway.
Everything changed after Trump won the election and appointed a new head of the Securities and Exchange Commission. Garlinghouse said the new leadership has taken a more positive approach to cryptocurrencies, an approach he believes the industry needs if it wants to grow in the United States.
He drew a comparison with the early Internet. In 1996, the Telecommunications Deregulation Act gave technology companies clear rules to build by, and that certainty brought investors. Crypto wants the same thing, he said. Most people in the industry want to follow the rules. They just need someone to write them first.
Was this writing helpful?
The story ends here
Trust with CoinPedia:
CoinPedia has been providing accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert team of analysts and journalists, following strict editorial guidelines based on EEAT (Expertise, Expertise, Credibility and Trustworthiness). Each article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy ensures unbiased reviews when recommending exchanges, platforms or tools. We strive to provide timely updates on everything cryptocurrency and blockchain, from startups to industry specialties.
Investment Disclaimer:
All opinions and ideas shared represent the author’s own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication accepts responsibility for your financial choices.
Sponsored and advertisements:
Sponsored content and affiliate links may appear on our site. Ads are clearly labeled, and our editorial content remains completely independent from our advertising partners.
Read upcoming news
