Ripple almost shut down in 2020 after the SEC sued the company. CEO Brad Garlinghouse said the government had “unlimited power and resources” and that fact alone made him determined to tackle the difficult decisions.
Garlinghouse attended the Korea University Business School and shared this story. He explained to the audience what really happened and why some parts of it are still difficult to accept.
Technology created for payments, not stock ownership
XRP moves quickly, costs less and scales well, Garlinghouse said. This is why Ripple built its payment technology around it. He compared XRP to Bitcoin, not to company stock. No one who buys XRP owns Ripple. Ripple itself is still a private company. It raised venture capital in 2012, 2015, and 2016, and these funding rounds created actual securities, i.e. shares that gave it voting rights and claims on the business. XRP doesn’t work that way. Ripple holds a large amount of XRP, but has no control over the tokens because the network runs on open source code.
The SEC saw it differently. The agency argued that XRP is considered a security rather than a currency or commodity, and accused Ripple of selling unregistered securities.
Meetings without alerts
Garlinghouse said he met with SEC staff four times between 2017 and 2019. He never brought a lawyer. “Why do we need lawyers? All I can do is show you how we use this technology,” he thought at the time. Garlinghouse met with the SEC four times between 2017 and 2019 without a lawyer.
He said no one at the SEC has ever said they thought XRP could be a security. Garlinghouse said the SEC never issued a warning that XRP was a security. Then, in 2020, the company sued the company and Garlinghouse personally over the XRP he personally sold.
He said what came next was unpleasant and even unethical. The SEC agreed to dismiss his own case, but not those filed against Ripple itself, and offered him a personal settlement while it continues to pursue the company.
A fight that lasted for years
The four-year legal battle with the SEC has cost Ripple approximately $150 million. Ripple won. The SEC said it would appeal anyway.
That all changed after Trump won the election and appointed a new SEC chairman. Garlinghouse said the new leadership has taken a much more constructive approach to cryptocurrencies. He believes the industry needs it if it wants to grow in the United States.
He compared it to the early days of the internet. The Telecommunications Deregulation Act of 1996 gave technology companies clear rules, and that certainty attracted investors. Cryptocurrencies wanted the same thing, he said. Most people in the industry want to follow the rules. I need someone to write it down first.
Was this article helpful?
The story ends here
Trust CoinPedia:
CoinPedia has been providing accurate and timely cryptocurrency and blockchain updates since 2017. All content is produced by an expert panel of analysts and journalists following strict editorial guidelines based on EEAT (Experience, Expertise, Authority, Credibility). All articles are fact-checked against reputable sources to ensure accuracy, transparency and reliability. Our review policy ensures unbiased evaluations when we recommend an exchange, platform, or tool. We strive to provide timely updates on all things cryptocurrency and blockchain, from startups to industry majors.
Investment Disclaimer:
All opinions and insights shared represent the author’s own views on current market conditions. Please do your own research before making any investment decisions. Neither the author nor the publication is responsible for your financial choices.
Sponsorships and Advertising:
Sponsored content and affiliate links may appear on our site. Ads are clearly visible and our editorial content is completely independent of our advertising partners.
Read the next news