Ethereum’s success is at least partly due to the favorable attitude of the U.S. Securities and Exchange Commission (SEC). The CEO of Ripple Brad Garlinghouse stated this at DC Fintech Week online conference.
Garlinghouse considers unfair the situation in which the SEC classifies XRP as a security, but has no claims against Ethereum (ETH). According to him, the position of the regulator had a significant impact on the market. “Over the past few years, XRP has been the second most valuable digital asset by market value. When it became clear that the SEC had given the green light to Ethereum, this [regulatory] clarity allowed the price of ETH to rise,” he said.
At the time of writing, the token is in seventh place. Moreover, the total value of ETH exceeds XRP by more than nine times, according to CoinGecko.
The SEC vs. Ripple
Earlier in December 2020, the SEC accused Ripple and its executives of the unregistered sale of securities under the guise of digital tokens worth $1.3 billion. Later, the regulator corrected the lawsuit, focusing on the actions of Brad Garlinghouse and Chris Larsen.
In July 2021, the company obtained a subpoena of the former director of the Division of Corporation Finance, William Hinman. During the meeting, he said that he had warned Ripple about the risk of XRP being recognized as a security. Previously in 2018, Hinman stated that “current offers and sales of Ether are not securities transactions.”
The human rights organization Empower Oversight saw a possible conflict of interest in the actions of the ex-official. At the time, he was allegedly “receiving millions of dollars from his former employer, the law firm Simpson Thacher”. The latter was affiliated with the Enterprise Ethereum Alliance organization, which promoted the digital asset.
“XRP is not a security”
On October 19, Garlinghouse gave an interview to Fox Business reporter Charlie Gasparino. The head of Ripple admitted that the conflict with the SEC affect the company’s business. The company cannot do business in the United States. At the same time, he stressed that the year is “amazing” outside the country.
He also noted that the Commission is trying to delay the proceedings. The interrogation of a number of witnesses has already been postponed to January 2022. Ripple, on the contrary, seeks to resolve the issue in court as soon as possible.
“It seems to us quite obvious that we have not violated American legislation regarding securities transactions. XRP is not a security, and we think we will eventually prove it in court. Therefore, we want to close the case as soon as possible,” he explained.