Ripple CEO Brad Garlinghouse criticized former Securities and Exchange Commission (SEC) Chair Jay Clayton for his regulatory approach and comments about the agency’s actions against crypto companies.
In an interview with CNBC last June 29th, 2023, Clayton recommended that the SEC should only pursue cases it believes would pass judicial scrutiny, emphasizing the responsibility of the state to bring valid cases and make rules.
However, Garlinghouse pointed out that the former SEC Chair had initiated a lawsuit against Ripple, himself, and co-founder Chris Larsen, which the regulatory agency later voted to dismiss without prejudice, suggesting that the lawsuit had little chance of success in court.
Clayton’s Emphasis on Regulatory Prudence
Clayton stated that cases should only be brought forward when there is a high degree of confidence that they will withstand judicial scrutiny.
“When you have the power of the state, you’re supposed to only bring cases and only make rules that you think are going to pass judicial muster,” Clayton stated.
Read: Former SEC Chair Pushes For Approval Of Spot Bitcoin ETFs
Garlinghouse’s Accusations of ‘Hypocrisy’
Garlinghouse did not take Clayton’s remarks lightly.
The Ripple CEO reminded the public that Clayton had initiated the SEC’s lawsuit against Ripple back in 2020.
“As a reminder, Jay Clayton brought the case against Ripple, me, and Chris Larsen. And left the building the next day,” Garlinghouse highlighted.
For context, the lawsuit alleged that XRP was thought to be a security and that its sales had brought in more than $1.3 billion for Ripple’s top executives, potentially violating US securities laws.
Pro-XRP Lawyer Joins the Criticism
Pro-XRP Lawyer, John Deaton, known for his support of representing around 75,000 XRP token holders during the lawsuit, also weighed in on the matter.
Deaton claimed that the former SEC Chair was clearly the person who pushed the agency’s action against Ripple’s executives, and perceived it as a bullying and intimidation tactic.
He pointed out the striking inconsistencies between Clayton’s role in the lawsuit and his current emphasis on only pursuing cases with a strong legal basis, highlighting the fact that the SEC had been unable to provide substantial evidence to support its claims that XRP was a security.
“When you consider the hypocrisy of Clayton’s remarks, remember he filed a lawsuit claiming ALL XRP from the beginning of time until the end of the world was, is, and always will be securities, even though the SEC couldn’t cite a single case in history to support this absurd claim,” Deaton emphasized.
Final Thoughts
The controversy surrounding the Ripple vs. SEC lawsuit sparked discussions about the regulatory environment for cryptocurrencies in the United States and the need for clarity in defining digital assets as securities or not.
In the wake of these developments, regulatory agencies are expected to heed the call for more stringent adherence to legal standards in pursuing cases against businesses in the crypto sector.