Gensler sees the court’s ruling as disappointing as the Commission partially lost its case against Ripple last week.
Chairman of the United States Securities and Exchange Commission (SEC) Gary Gensler has expressed his disappointment with a court’s ruling in the Commission’s case with Ripple. Last week, a judge in the Southern District of New York pronounced a partial victory in favor of Ripple, ruling that the XRP token is not a security.
Speaking at a National Press Club event in Washington DC, Gensler said:
“We’re pleased from that decision recognizing the importance of protecting investors on the institutional investors. While disappointed on what they said about retail investors, we’re still looking at it and assessing that opinion.”
According to a ruling last Thursday, Judge Analisa Torres concluded that XRP is not a security and that XRP sales on exchanges are not investment contracts. However, the Ripple victory was only partial because the ruling concluded that the institutional sale of XRP tokens contravenes federal laws.
The SEC and Ripple have been at loggerheads since 2020 after the Commission sued Ripple for failing to register XRP as a security before selling the tokens and raising $1.3 billion. The SEC also named Ripple co-founder Christian Larsen and CEO Brad Garlinghouse as defendants.
Following the judgment, Garlinghouse took to Twitter to thank everyone that helped with the case, stating that he knew since Dec 2020 that Ripple was “on the right side of the law, and will be on the right side of history.” Following the ruling, the price of XRP jumped over 70% within 24 hours, according to data from CoinMarketCap.
Ripple now expects banks and financial institutions to consider using XRP and its On-Demand Liquidity (ODL) product. ODL helps financial institutions conduct cross-border transactions using XRP as a bridge token.
SEC and Gensler Have Been Going after Ripple and Other Crypto Companies
The SEC has become known for many things, including tackling crypto firms for different reasons. Recently, the SEC accused crypto exchange Binance of several violations, including commingling user funds. The Commission also accused Binance of deliberately allowing US customers to trade outside of Binance.US, the exchange’s US arm operating independently of the parent company.
Binance responded, expressing disappointment at the SEC’s decision. The exchange said it has always engaged in “good-faith discussions” with the Commission and is disappointed that the SEC chose a lawsuit instead.
The SEC also sued Coinbase in a New York Federal Court, accusing the company of running an unregistered national securities exchange and broker. According to the SEC, Coinbase has been violating this rule since 2019. In May, the SEC had issued a Wells Notice to Coinbase, warning of the potential lawsuit. In Coinbase’s response, the exchange said the Commission has been unfair and unreasonable regarding digital assets. However, Coinbase said it is ready for a “legal process to provide the clarity we have been advocating for”.
At the event in Washington DC, Gensler seemed to give an indirect answer to a question about the SEC preferring regulation by enforcement and not by rulemaking.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.