“I think the SEC, in my opinion, has lost sight of their mission to protect investors. And the question is, who are they protecting in this journey?” Garlinghouse said on Thursday.
The SEC was not immediately available for comment when contacted by CNBC.
The SEC in 2020 accused Ripple and its executives of conducting a $1.3 billion securities fraud via sales of XRP to retail investors.
Ripple, the regulator alleged, failed to register an ongoing offer and sale of billions of XRP tokens to investors, depriving them of adequate disclosures about XRP and Ripple’s business.
In July, Ripple was handed a pivotal victory as a judge ruled that XRP is not in and of itself a security.
Following this, the SEC was denied a request for an interlocutory appeal.
Then, in October, the SEC dropped its securities law violation charges against Garlinghouse and Ripple executive Chris Larsen.
The next key step in the case is the remedies discovery process.
The SEC has 90 days from November 9 to conduct remedies-related discovery, according to a proposed schedule submitted by the SEC.
“I think it is a positive step for the industry, not just for Ripple, not just for Chris and Brad, but for the whole industry, that the SEC has been put in check in the United States. And I’m hopeful this will be a thawing of the permafrost in the United States for really seeing an amazing industry that has immense potential to thrive in the largest economy in the world,” Garlinghouse told CNBC.
Garlinghouse hopes that the U.S. will move beyond a situation where crypto regulation is dictated by a constant stream of litigation to a point where federal laws governing digital currencies are introduced by Congress.
“One of the things that people talk about is, one of the definitions of insanity is doing the same thing over and over again, and thinking you’ll get a different outcome, the SEC is doing the same thing over and over again. And they think, I guess, they’re gonna get a different outcome at some point,” Garlinghouse continued.
“(Digital asset manager) Grayscale also had, I think, an important victory in the United States about the bitcoin ETF, where the judge had to get, a federal judge talking about a federal agency, the SEC, saying the SEC is being arbitrary and capricious,” he added, referencing an appeals court ruling that said the SEC was wrong to reject an application from Grayscale to create a bitcoin ETF.
“Generally, judges tend to be pretty down the middle and try to not be dramatic — those are damning words. So I think at some point, the SEC has to step back and realize that their approach of regulation through enforcement, let’s just bring lawsuits, has to break.”
Source@cnbc.com
