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Brad Garlinghouse

Ripple’s former CEO Chris Larsen onboards a new attorney to fend off SEC’s lawsuit

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Ripple has had quite a rough year. While the globe has been battling with the second wave of COVID, Ripple dealt with the lawsuit issued by the Securities and Exchange Commission [SEC] of the United States of America. As the lawsuit prolongs, Chris Larsen, who was also charged for being a part of the company, has found a new attorney to represent him in the case.

The SEC went on to label XRP as a security. In addition, it accused Ripple of engaging in the sales of “unregistered securities.” It charged the platform’s current and former CEO, Brad Garlinghouse, as well as Chris Larsen, respectively, of being a part of the same.

Ripple was represented in the case by a team of 21 lawyers, while Larsen was represented by four lawyers, namely Kristina Anne Bunting, Justin David Ward, Martin Flumenbaum, and Michael E. Gertzman. Another name was added to this list as a new lawyer jumped onboard.

Ripple vs. SEC

James K.Filan, an attorney representing the crypto platform, revealed that attorney Sarah J. Prostko was the latest to join Larsen’s team of lawyers. Welcoming the attorney, Filan tweeted,

“Attorney Sarah J. Prostko has appeared in the case on behalf of Chris Larsen. Welcome to Team Ripple.”

With a B.A. degree from American University, Prostko went on to finish law at the New York School of Law, J.D.

Ripple
Ripple's former CEO Chris Larsen onboards a new attorney to fend off SEC's lawsuit 2

The case has been taking many turns and about two months ago, the SEC sought the personal financial records of Garlinghouse as well as Larsen, however, the court shot down this demand calling it “irrelevant” to the case.

Additionally, Garlinghouse and several others including the XRP army was seen yearning for better regulations. With the change in leadership in the SEC, Garlinghouse hopes for better days for the platform. He said,

“I’m hopeful that as a new administration comes into the SEC, there’s an opportunity to revisit some of those conversations. And as you may know, and may recall Jay Clayton as the chair of the SEC, the day before he left office, he brought this lawsuit against Ripple and against me personally, against Chris Larson personally. And we don’t think that made a lot of sense, given that XRP had been trading in the marketplace for eight years, literally nearly a trillion dollars of XRP has traded out there.”

Ripple’s CEO Hopes To Garner Better Regulatory Clarity With New SEC Leadership

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XRP witnessed a drastic fall over the last couple of months, all thanks to the SEC lawsuit against Ripple. The altcoin was trading for $0.58 with a 5.49% surge in the last 24-hours. The coin was labeled a security and lost its spot on an array of prominent cryptocurrency exchanges following the lawsuit. While this negated trading activity in the XRP market, Ripple continued to face the wrath of the lawsuit.

Appearing in a recent interview with Bloomberg, Brad Garlinghouse, the CEO of Ripple revealed his stance on the ongoing case and his expectations from the new team of the Securities and Exchange Commission of the United States.

Ripple CEO: US The Only Country Viewing XRP As Security

The lack of regulatory clarity in the US has been time and again pointed out by a several individuals across the globe. Ripple, however, seemed to have realized it the hard way. While platform tries to fend of all the charges against it, Garlinghouse pointed out that the lawsuit was against the entire crypto industry rather than just Ripple itself. He suggested that the US has been a laggard in delivering a clear regulatory environment. Countries like the UK, Japan, Singapore as well as Switzerland, have managed to deliver a better picture in the same, making the US the only country on the planet to label XRP as a security, he added.

Speaking about the next steps in the lawsuit, Garlinghouse said,


“I’m hopeful that as a new administration comes into the SEC, there’s an opportunity to revisit some of those conversations. And as you may know, and may recall Jay Clayton as the chair of the SEC, the day before he left office, he brought this lawsuit against Ripple and against me personally, against Chris Larson personally. And we don’t think that made a lot of sense, given that XRP had been trading in the marketplace for eight years, literally nearly a trillion dollars of XRP has traded out there.”

While Gary Gensler is on his way to become the next SEC chairman, Garlinghouse seeks an opportunity to have a conversation with a new leadership. He further suggested, “that’s constructive for ripple and really for the whole crypto industry to provide that clarity and allow people to participate in these markets and to build companies around these technologies.”

Brad Garlinghouse Urges Court To Terminate SEC Lawsuit Against Him

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The CEO of Ripple, Brad Garlinghouse, has reportedly filed a motion to suspend the lawsuit that the Securities and Exchange Commission [SEC] of the United States imposed against the crypto platform.

While Ripple has time and again tried to diminish claims of XRP being a security, the SEC outrightly accused Ripple of selling unregistered securities. Despite Ripple denying this, the SEC went on to prolong this lawsuit. Amidst this, Brad Garlinghouse decided to write to the Federal Judge urging her to terminate the lawsuit against him.

Brad Garlinghouse Believes SEC’s Lawsuit Against Him Is “Regulatory Overreach.”

The SEC hit Ripple with the lawsuit back in December 2020, however, this lawsuit went in for a little alteration. The amended version pointed out that the CEO of the company, Brad Garlinghouse, along with its former CEO Chris Larsen was part of manipulating the XRP market. Further denying these accusations, a recent letter submitted to Federal Judge Analisa Torres, by Garlinghouse’s lawyers on behalf of the CEO suggested that SEC’s lawsuit against him should be dismissed on grounds of regulatory overreach.

The letter further suggested that Garlinghouse had alerted the SEC of its inaccuracies during the investigative process itself. However, the same “defects” have reportedly been carried forward in its amended version as well. The letter further read,

“The SEC has not adequately alleged that Mr. Garlinghouse knew or recklessly disregarded that Defendants’ transactions in XRP were investment contracts or that Ripple was somehow acting improperly in selling XRP such that he can be liable for aiding and abetting Ripple’s sales. Nor – under Supreme Court and Second Circuit precedent – can the SEC establish that Mr. Garlinghouse’s sales and offers of XRP fall within the territorial scope of the Securities Act.”

Brad Garlinghouse, has about four lawyers –  Alexander Javad Janghorbani, Lucas Dehaan Hakkenberg, Matthew Solomon as well as Samuel Loewenson Levander representing him against the SEC. A total of twenty-one lawyers are helping Ripple in this lawsuit.

While Ripple awaits trial, XRP continues to slump like the other coins in the market.

Ripple Onboards New Senior Vice Prez Of Engineering From Amazon Amidst SEC Lawsuit

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2020 ended on a bitter note for Ripple as well as the XRP community. The SEC lawsuit caused a lot of commotion in the market which led to the altcoin bagging limited gains from the latest crypto rally. The SEC claims that XRP is a security while Ripple stands strong with the narrative that it is not. This tiff between the two XRP to slump all the way down to $0.20. The platform had previously expressed its urge to leave the US citing lack of regulatory clarity as one of its reasons, it seems like it was too slow to do so. Ripple did not limit its functions as the platform was out and about. The crypto platform’s latest recruitment is substantial proof of the same.

Ripple Recruits Amazon Executive

The show must go on. Ripple seems to be complying with this motto despite its clash with the SEC. A recent tweet from the CEO of Ripple, Brad Garlinghouse revealed that the team had a new Senior Vice President of Engineering who previously served Amazon as the Vice President of Delivery Experience. Garlinghouse’s tweet read,

“Ripple’s all-star engineering team continues to grow – thrilled to welcome Dev as our new SVP of Engineering!”
Devraj Varadhan in an elaborate post on Ripple’s blog pointed out that he worked for Amazon for over 15 years and decided to join Ripple to aid the platform’s vision of enabling the Internet of Value [IoV]. He pointed out that the success of companies comes from the obsession with their customers, the weightage of invention, engineering strength as well as operational rigor. The world figured the importance of digitalization during the pandemic, as several firms step into digitalization, Varadhan seems to be getting into the process with an already established platform.

He further wrote,

“One of the most important lessons that I carry with me from my time at Amazon is the idea of “divine discontent” when it comes to serving customers.”
While XRP did not really make a lot of profit during this bull run, the news of its latest recruit didn’t act as a catalyst either. The altcoin managed to follow the trail of the ongoing trend and surged to $0.30 with a 4.60% surge in the last 24-hours.

Ripple’s Brad Garlinghouse: We’ve Moved From Lack Of Regulatory Clarity To Chaos

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XRP was finally back on track after facing the damaging repercussions of the SEC lawsuit. Brad Garlinghouse and several members of Ripple were trying to make amends, however, the crypto-asset kept slumping beyond measure.

So much so that XRP was even ousted from several exchanges and had briefly lost its position as the fourth largest coin. Ripple’s Brad Garlinghouse finally broke his silence and answered several questions related to the lawsuit.

Brad Garlinghouse Says ‘Legal Processes Can Be Slow’

The $1.3 billion lawsuit against Ripple had an array of allegations that summed up to XRP being labeled as a security. While Ripple has time and again asserted that XRP is a currency and not a security, the SEC went on to press charges for selling unregistered securities.

Brad Garlinghouse, the CEO of Ripple took to Twitter to answer some of the queries of the crypto community. His tweet read,

Coinbase, Bittrex, Grayscale, and several other exchanges put a hold on XRP trading until they got a clearer picture of the lawsuit. Brad Garlinghouse clarified that it was the lack of regulatory clarity in the country that had caused the halt of trading.

He pointed out that these cryptocurrency exchanges were caught up in conflicting policies which at times force platforms to act conservatively. The exec also went on to affirm that Ripple had no control over where XRP was listed, hence the platform did not pay exchanges to list XRP.

Furthermore, shedding light on the “regulatory chaos” that has struck the US, Garlinghouse said,

“We’ve moved from lack of regulatory clarity to regulatory chaos in the U.S.”

He further added,

This is why regulation by enforcement is such bad public policy. With the new administration, we expect #DCEA to be reintroduced – common-sense legislation providing clarity to the entire industry.”

He further pointed out that legal processes could take time to unfold and Ripple would reportedly be filling its initial response in the next few weeks.

Garlinghouse concluded his tweet by suggesting that Ripple was on the right side of the facts and would not give up its fight.

SEC Finally Drops Bombshell Lawsuit Against Ripple

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The United States Securities and Exchange Commission [SEC] has finally announced filing an action against Ripple Labs Inc. and two of its executives on the 22nd of December. Claiming the two execs, namely Christian Larsen, Ripple’s co-founder, executive chairman of its board; and Brad Garlinghouse, the company’s current CEO, as significant security holders, SEC alleged that they secured more than $1.3 billion through an unregistered, ongoing digital asset securities offering.

This news comes just a day after Ripple CEO Brad Garlinghouse warned the community about an imminent lawsuit over the blockchain firm’s sale of XRP which happens to be associated with the platform.

According to the official document, Ripple also allegedly distributed billions of XRP in cryptocurrency exchange for non-cash consideration, like labor and market-making services. Apart from structuring and promoting the XRP sales used to finance the firm’s business, both Larsen and Garlinghouse also affected personal unregistered sales of XRP totaling nearly $600 million. The complaint further alleged that the two defendants in question apparently failed to register their offers and sales of the digital asset or satisfy an exemption from registration, which was found to be a violation of the registration provisions of the federal securities laws.

Stephanie Avakian, Director of the SEC’s Enforcement Division stated,

“We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”

A divided Industry

Despite Garlinghouse’s claim that Ripple is not only on the right side of the law but also on the right side of history, there are many in the community who would contradict.

Clearly, the cryptocurrency industry was probably never as divided as it is currently. As the news of the lawsuit broke on Tuesday, several prominent personalities of the crypto industry went on to share their opinion on Twitter. While there were some who sympathized with Ripple and the executives and called out the agency for its stance on the matter, there were many advocates of the space who sided with SEC’s latest move.

Co-founder of Morgan Creek Digital, Anthony Pompliano, for one, made his lenience quite clear with the following tweet:

“Good morning to everyone except the people who thought they could sell unregistered securities and get away with it”

Pompliano argued that he listened to their opinion but lost when “they openly became enemies of Bitcoin and the decentralization movement”. This could be attributed to an official release in which Ripple had earlier claimed that Bitcoin and Ethereum were “Chinese-controlled”. This did not sit well with, Ethereum co-founder, Vitalik Buterin as well, who lashed out at the firm in the following tweet:

Interestingly, Messari’s Ryan Selkis also took a jibe at Ripple’s popular mantra “we’re all in this together” and said that the “bad limb” needs to be amputated.

Ripple CEO Confident To Fight And Win As SEC Poises For A Lawsuit

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Ripple CEO Brad Garlinghouse claimed that the United States Securities and Exchange Commission [SEC] intends to sue the blockchain firm over its sale of XRP which happens to be associated with the platform. The lawsuit in question will name Garlinghouse and Ripple Co-founder Chris Larsen as defendants.

The suit has not been filed yet, but will be one of the most high-profile cases of SEC actions against a leading company in the cryptocurrency industry. The latest news follows years of conflict between the company and the agency about whether XRP is a security, making it similar to a share of stock which must be registered with the SEC or a currency and thus beyond the SEC’s scope.

The SEC had previously allowed XRP to function as a currency for more than eight years. The latest decision by the Chairman of the agency, Jay Clayton to sue the company just days before the change in administration, has garnered sugnifcant amount of criticism from the crypto-communuity.

Garlinghouse lashed at the agency and said that SEC was “out of step” with other G20 countries as well as the rest of the US govt and should not be able to cherry-pick what innovation looks like pointing out that decisions such as these directly benefits China. He went on to assert that,

“Make no mistake, we are ready to fight and win – this battle is just beginning.”

It is important to note that no foreign regulator has determined that XRP is a security. In fact, Japan’s Financial Services Agency [FSA] has already made it clear that XRP is not a security. Reacting to the latest news, SBI’s Yoshitaka Kitao had recently stated that he was optimistic that “Ripple will prevail in the final ruling in the US”. Kitao further added that SBI Holdings will continue to remain a steadfast partner to Ripple, and looks forward to expanding together in Asia.

This is what Ripple’s General Counsel stated just as the news of the lawsuit emerged,

“In 2015, the US Government concluded XRP was a virtual currency. Last I checked the SEC is still part of the US Government. Here’s the plus side – the industry will finally get the clarity it deserves. Goodbye “Howey test,” hello “Ripple test.”

From the pages of history:

Back in 2015, both DOJ as well as FinCEN had settled a case with Ripple and determined that XRP was in fact a convertible virtual currency and that the blockchain firm was a money transmitter of the crypto-asset. The settlement required Ripple’s XRP transactions to comply with laws that do not apply to securities transactions.

Ripple Harbors Only 5% US Customers Reveals Garlinghouse As Relocation Plans Surface

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The uncertain regulatory climate in the United States has made it extremely difficult for crypto platforms to function in the country. Ripple seems to be widely affected by the same. Recently, the crypto platform revealed that it was considering basing its headquarters outside the United States for the same reason. Garlinghouse appeared in an interview addressing the same.

Ripple Users Have Expressed Concerns Over Regulatory Climate In US

Back in October, several members of Ripple suggested that they had intentions of moving Ripple’s headquarters that is currently in California, outside the United States. The former CEO of Ripple, Chris Larsen pointed out that the US limits crypto platforms from operating globally and this factor would lead the platform to move to countries like Switzerland, the U.K., Singapore, Japan that have better clarity on crypto. In a recent interview with CNN anchor Julia Chatterley, Brad Garlinghouse addressed an array of issues that Ripple was facing in the US.

While suggesting that XRP and Ripple were falling behind the crypto race as the asset and the platform were not as popular among the US citizens. He further revealed that only 5% of Ripple customers were from the United States, whereas 95% of the platform’s customers accounted for citizens outside the country. He added,

“And people say ‘You are a U.S. company, why is that?’ One of the dynamics is that U.S. companies are waiting for clarity, and that clarity emanates from the Securities and Exchange Commission.”

Previously, the United States had been open to innovation and hence the global technological scene got a boost. Several members of the Ripple community have also expressed their concerns regarding the “regulatory dynamics” in the United States. Not complying with the financial regulators could land any platform in troubled waters. While Ripple has been trying to do so, the US’s uncertainty in regulations has been putting the platform behind. He further added,

“For us, around XRP and over 100 companies that are working with XRP getting that clarity, it’s very clear to me that XRP is being used by many companies as a currency. You had the U.S. Department of Justice refer to XRP as a currency, you had FinCEN refer to XRP as a currency. But you haven’t yet had that clarity from the SEC.”

Additionally, Garlinghouse went on the endorse Ripple and XRP in the interview. XRP seemed to have had a great year with a 186% rise over the last 12 months. At the time of writing, XRP was trading for $0.627.

Ripple

Brad Garlinghouse Seeks ‘Level Playing Field” As Regulators Allegedly Favor Chinese Tech Over US

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Cryptocurrencies have had a tough time establishing itself in the globe. From being sidelined to being touted as a darknet currency, cryptocurrencies are finally seen as a major asset in the financial sector. However, the regulations for a number of digital assets remain uncertain as regulators continue to probe these currencies. Ripple has been quite vocal about how unclear and hazy the regulations have an impact on the crypto-verse.

US Regulators Favoring Chinese Technologies?

Just last week the former CEO of Ripple, Chris Larsen along with Brad Garlinghouse, the current CEO of Ripple revealed that the company was inclined towards shifting their office to a different country that had better clarity on regulations pertaining to crypto. Prolonging the same, Ripple’s Garlinghouse shared an array of tweets. While the previous statements made by the CEO were misunderstood by many, Garlinghouse clarified that Ripple was not looking to “evade US regulation.”

Pointing out that Ripple has complied with “critical laws” including BSA/AML controls, Garlinghouse suggested that Ripple was a proud company of the United States. Elaborating on the most recent issue regarding the status of crypto in the country, Garlinghouse tweeted,

“However, last week’s DOJ report lists 8 separate US reg bodies each with a different view: crypto is property, crypto is a commodity, crypto is a virtual currency, crypto is a security, etc. Regulation shouldn’t be a guessing game.”

Furthermore, Garlinghouse went on to reveal that certain regulators of the United States were actively favoring Chinese technologies over companies based in the States. He added,

“Legislation like the #DCEA can bring US companies to equal footing.”

Regulations or lack of regulations has come in the way of innovation and has been posing as a huge barrier to innovation. Following the same, Larsen had suggested that Ripple would consider moving to Switzerland, Singapore, UK, or Japan.

Garlinghouse further tweeted,

The Ripple CEO’s comment section was flooded with opinions regarding the matter. While some suggested that regulatory clarity was not limited to only Ripple and XRP, a few others highlighted how the United States has always portrayed a laid back attitude with regard to new banking products.

Ripple’s Former And Current CEO Reveal Plans To Exit US Over Regulatory Climate

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Decentralization is what the crypto industry hoards. Nevertheless, the crypto-verse continues to fall under the purview of many regulators across the world. Although cryptocurrencies have a ton to offer when it comes to digitization, the risks pertaining to them also follow. As a result, some regulators have had a difficult time scrutinizing these assets. However, the lack of regulatory clarity appears to be a big problem for Ripple.

Is US A No-Go For Ripple?

Appearing in a recent interview, the former CEO of Ripple, Chris Larsen hinted that the blockchain-based payment protocol was considering exiting the United States following the severe regulatory implications put forth by the country’s regulators. Currently based in California, Ripple has been seeking better clarity on the regulatory climate of Ripple in the country.

Pointing out how the US limits crypto platforms from operating globally, Larsen highlighted that Ripple was looking to relocate its headquarters from San Francisco. He said,

“We don’t know how it’s going to exactly play out, You know, those countries are trying to sort of become fintech centers of the world. You have clarity in places like Switzerland, the U.K., Singapore, Japan.”

He also added that the above-mentioned countries would have the upper hand as they would harbor capital markets, regulators as well as innovators in the same city, unlike the United States. In the United States, New York is where investors can be found, Washington has lawmakers, and Silicon Valley has tech entrepreneurs, and none of them can understand each other, he added.

Seconding Chris Larsen’s take on the hostile regulations of the United States, Ripple’s current CEO, Brad Garlinghouse tweeted,

“Strongest internet companies built in the US, in part b/c of regulatory clarity. We have that opp with blockchain + digital assets. Responsible players like Ripple aren’t looking to avoid rules, we just want to operate in a jurisdiction where the rules are clear. #DCEA of 2020.”

This wasn’t the first time, Garlinghouse had called out the regulators of the United States. Towards the end of May, Ripple’s CEO shared a tweet urging the regulators to embrace crypto instead of hindering its growth.

Ripple is not the only crypto platform that has been prey to the uncertain regulatory climate. If the United States prolongs its hostility towards crypto, the country could lose its edge in digitalization.