By Tom Blitzer
Key Insights:
- Ripple CEO slams SEC’s use of transparency reports in lawsuit.
- Garlinghouse hints at changes in future XRP reports.
- The company says Ripple’s XRP is not a security, but context matters.
In a recent development, Ripple CEO Brad Garlinghouse has voiced his disapproval of the United States Securities and Exchange Commission (SEC). Significantly, his criticism centers on the SEC’s use of Ripple’s quarterly XRP Markets Report in their ongoing lawsuit against the company.
Ripple’s Transparency Backfires
Ripple initiated these reports with a clear intention. They aimed to voluntarily provide updates on their XRP holdings, enhancing transparency in the often opaque cryptocurrency industry. However, Garlinghouse has now expressed his dismay as these reports were later “used against” the company in the SEC’s lawsuit.
Despite this setback, the CEO reaffirmed Ripple’s commitment to transparency. Yet, he hinted that future reports might see some changes. This development underscores the delicate balance between openness and legal vulnerability in the crypto world.
Ripple’s Q2 2023 XRP Markets Report
On July 31, Ripple unveiled its Q2 2023 XRP Markets Report. This report stands apart from previous ones, focusing on critical highlights such as Judge Torres’ significant summary judgment ruling. It also clarifies misconceptions and sheds light on Ripple’s XRP holdings.
The report reveals an increase in Ripple’s XRP holdings from 5,506,585,918 to 5,551,119,094, a surge of approximately 45 million. At the same time, the total XRP on ledger escrow decreased by nearly 1 billion, a trend attributed to the rising demand for XRP.
Ripple and the SEC Lawsuit
Besides Garlinghouse, XRP lawyer John Deaton also strongly disapproved of the SEC’s use of these reports as evidence against the company. He pointed out that Ripple willingly publishes these reports quarterly, while other firms often hide token sales or even disguise such transactions.
Ripple acknowledged the significant ruling made by Judge Torres in the case of Securities and Exchange Commission v. Ripple Labs on July 13. The order declared that XRP is not considered a security. However, Ripple clarified that while all XRP sales are not classified as securities, sales executed under written contracts can be categorized as investment contracts and thus fall under the security classification.
Moreover, Ripple addressed misconceptions surrounding its partial victory. It stressed that while XRP is not a security in specific contexts, it may still be considered as such in particular circumstances. Additionally, the company clarified that the ruling protects sophisticated institutions but does not extend the same protection to retail buyers.
In conclusion, Ripple’s ongoing legal battle with the SEC highlights the complexities of the cryptocurrency industry. As the company navigates these challenges, its commitment to transparency and the potential changes to its reporting practices will be closely watched.