On Monday, Ripple Labs’ CEO Brad Garlinghouse said that the company is making great strides in its legal battle with the US Securities and Exchange Commission (SEC). The case is centered on fintech’s cryptocurrency, XRP, which is currently the seventh-biggest in the market. Garlinghouse said that they expect to have an outcome as early as next year. He said that even though the judicial process is slow, they have already made some good progress. He said that the judge was asking some good questions and it shows that the judge is aware that it is not just about Ripple because it will undoubtedly have broader implications.
Garlinghouse added that he was hopeful of seeing some closure in the coming year. Based in San Francisco, Ripple generated a significant amount of buzz during the crypto frenzy that occurred between 2017 and 2018, when prices of bitcoin, ether and some other cryptocurrencies hit record highs. This rally also benefitted the token XRP, which is closely associated with Ripple, and it reached an all-time high value of $3. Since then, it has declined rather dramatically, but it is now riding the latest crypto wave and has made gains of 370% year-to-date. The technology of Ripple is developed to allow banks and other financial services companies to send money across borders at lower cost and much faster.
Another product is also marketed by Ripple that uses XRP for cross-border payments and is known as On-Demand Liquidity. The SEC has expressed its concerns about the company’s ties to XRP and alleged that its executives conducted an unregistered securities offering for selling XRP tokens worth $1.3 billion. However, Ripple has argued that XRP should not be classified as a security because this would bring it under a lot of regulatory scrutiny. This case comes as regulators all over the world are taking a close look at cryptocurrencies.
The crypto space remains mostly unregulated, but has experienced a massive boom since last year. According to Garlinghouse, some countries like Switzerland, Japan and the United Arab Emirates have shown ‘leadership’ where regulation of crypto is concerned, whereas India and China have chosen to crackdown against the industry. The CEO said that generally, the direction has remained positive. The former chief executive of Credit Suisse, Brady Dougan said that regulation in crypto is an important area and would take time to develop. He is now running fintech company Exos and said that the market is still in its development stage and is quite healthy.
A privately-held firm, Ripple had last been valued at a whopping $10 billion and some of its investors include prominent names like Japan’s SBI Holdings, Andreessen Horowitz and Alphabet Inc.’s venture capital arm GV. The case will obviously have repercussions depending on how things turn out for Ripple in the future. For now, the CEO and the company remain undisturbed about the ongoing proceedings as they believe that things are going in their favor. But, it is obvious that the SEC does not intend to take the issue lightly and will pursue the matter.
