SEC Chair Expresses Disappointment in Ripple Labs Ruling
Securities and Exchange Commission (SEC) Chair Gary Gensler reportedly said the agency is “disappointed” in last week’s court ruling in its case against Ripple Labs.
The ruling gave the cryptocurrency industry a boost by finding that Ripple Labs did not violate federal securities laws in selling XRP tokens on public exchanges, Reuters reported Monday (July 17). The decision is specific to this case, but may help other crypto firms in similar legal battles.
While expressing the agency’s disappointment in the ruling, Gensler said the agency is pleased that another portion of the ruling said Ripple should not have sold its XRP tokens directly to sophisticated investors.
Gensler suggested while making these remarks during a meeting at the National Press Club that the SEC could appeal the decision, The Wall Street Journal (WSJ) reported Monday.
“This is a recent decision,” Gensler said, per the report. “We’re still looking at it and assessing that opinion.”
The federal judge’s ruling on Thursday (July 13) confirmed that programmatic sales of Ripple’s XRP token to individual investors failed to meet the criteria establishing that they constitute illegal securities offerings.
The judge also ruled that Ripple’s XRP token is, legally, a security when it is sold to institutional investors.
With this landmark ruling, Ripple defeated many crucial elements of an SEC enforcement case against its sale of over $1.4 billion of its own XRP digital tokens.
On the day after the ruling, Friday (July 14), Ripple CEO Brad Garlinghouse said in an interview with Bloomberg TV that the ruling means that Ripple’s XRP “is not a security,” which gives the firm more leeway to go after new business.
It also means Garlinghouse doesn’t need to worry about promoting Ripple’s use cases and technology, Bloomberg added at the time.
On Monday, CNBC reported that Ripple is now optimistic about the prospect of financial institutions being interested in using its On-Demand Liquidity (ODL) product, which uses XRP for money transfers, in the third quarter.
Ripple General Counsel Stu Alderoty told the media outlet that the court ruling meant that banks in the U.S. would start showing interest in adopting XRP in cross-border payments.
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