- Brad Garlinghouse CEO of Ripple Labs, has made it clear that the SEC is fighting a losing battle against Ethereum
- He predicts the SEC will lose just like they did in the XRP case
- Industry stakeholders like Coinbase’s chief legal officer, Paul Grewal, agree that the SEC will have no reason to deny the spot Ether ETFs.
Brad Garlinghouse, CEO of American FinTech giant Ripple, has said the US SEC (Securities and Exchange Commission) is bound to lose its case against Ethereum. This follows a recent buzz about the regulator reinforcing its investigations on whether Ether, the native token of the Ethereum network, should be classified as a security. The SEC’s case against Ethereum as a security is particularly significant because of the Commission’s pending decision on a spot Ether ETF.
Garlinghouse Claims The SEC Will Lose The War Against ETH
Garlinghouse has likened the SEC’s silent feud with Ethereum to the XRP (Ripple) case, where the SEC dragged the company to court for engaging in unregistered security offerings and sales. In essence, XRP was a security, according to the SEC, and had to register with the Commission and abide by its regulatory requirements.
With the SEC, the usual thing to do would be to opt for settlements, however, Ripple buckled in and chose to contend with the regulator in court. After three long years into the legal battle, the XRP secured a victory over the SEC, albeit a partial one. Judge Analisa Torres determined that the XRP was not a security when sold on digital asset exchanges. However, Torres also ruled that XRP broke securities laws when sold to institutional investors.
Garlinghouse points out “the SEC picked fights with the industry and is losing badly in courts.” From his point of view, Ripple’s win over the SEC has now set a precedent for similar cases such as Ethereum’s.
“At what point will the SEC realize they will lose the war against ETH just as they lost against XRP?” asked Garlinghouse.
Coinbase CLO Says SEC Has No Good Reasons To Deny Spot Ethereum ETF
In a social media post, Coinbase’s Chief Legal Officer Paul Grewal maintains that “ETH is a commodity, not a security” while citing supportive positions of past senior SEC officials and even Garry Gensler himself before becoming SEC Chair. Grewal’s post sought to correct the “ETH misinformation” out there as we look forward to a spot Ether ETF.
Among other documents, Grewal cited a 2018 testimony, where “Gensler himself testified before Congress that ETH is not a security.” Gensler at the time of this testimony was a senior lecturer at the MIT Sloan School of Management.
“The crypto markets have gotten some clarity with the SEC stating that the two largest coins, Bitcoin and Ether are not currently securities. There are strong cases to be made, though, that a number of the other large market cap tokens are noncompliant,” testified Gensler.
Grewal also highlighted the CFTC’s (Commodity Futures Trading Commission’s) contrasting position with the SEC as a sign the SEC is wrong on the matter. The CFTC Chair Rostin Behnam has already classified Ethereum as a commodity unlike his SEC counterpart Gensler. This leaves the SEC with a very significant decision that will determine the next events around the pursuit of a spot Ether ETF.
“The SEC has no good reason to deny the ETH ETP applications. And we hope they won’t try to invent one by questioning the long established regulatory status of ETH, which the SEC has repeatedly endorsed. That’s not how the law works. And Americans deserve better,” Grewal said.