Ripple Labs CEO Brad Garlinghouse has, in several recent statements, reiterated his firm belief
in the company’s victory against the U.S. Securities and Exchange Commission (SEC) on the
securities status of XRP.
“Everything the SEC cares about, they lost… A freight train was driven through Gensler’s
arguments,” the CEO said at Messari’s Mainnet conference. The statements echo the
confidence of Ripple, which had been embroiled in a legal tussle with the regulator for close to
three years now.
While speaking on the X (formerly Twiter) forum organized by Linqto, which also had prominent
XRP advocate John Deaton in attendance, Garlinghouse expressed the chances of SEC’s
victory at appeal are very slim.
The regulator is seeking to overturn a July decision by Judge Analisa Torres that XRP sales to
individuals don’t qualify as a security. But Garlinghouse believes Judge Analisa will deny the
interlocutory appeal.
According to Garlinghouse, the judge applied principles that the SEC itself had held onto for a
long time – the Howey test. He continued that what created the distinction between institutional
and XRP sales was whether the buyers knew they were buying from Ripple.
Furthermore, he said the court reasoned that most individual sales of XRP were done through
blind exchanges. Thus, the buyers couldn’t have acted on promises made by Ripple since they
didn’t know they were buying from the company.
However, should the decision be overruled, Garlinghouse stated the path to appeal isn’t a
straight road for the regulator. He clarified that if the interlocutory appeal is allowed, then the
regulator still has to convince the courts of appeal to hear its case.
Furthermore, he added that the outcome at that stage would be a return to Judge Analisa
Torres to preside over the decision again. Garlinghouse noted that a similar outcome would be
reached so long as the judge is acting on the principles underpinning Howey’s investment
contract test.
