Brad Garlinghouse, the CEO of embattled exchange Ripple, says its feud with the SEC is likely to cost over $200 million. The case rests on whether or not XRP is a security.

Ripple’s ongoing battle with the Securities and Exchange Commission (SEC) will likely cost the firm in excess of $200 million. The company’s CEO, Brad Garlinghouse, made the revelation in a fireside chat with CNBC. The news outlet reported his comments on Monday. His admission of the huge legal costs quickly turned up in numerous reports around the web.

“With the SEC, we will spend — this is the first time I’ve shared this publicly — by the time all’s said and done, we will have spent $200 million defending ourselves against a lawsuit, which from its very beginning, people were like, well, this doesn’t make a lot of sense,” Garlinghouse said.

The US regulatory agency has accused Ripple of violating U.S. securities laws. The specific complaint revolves around the exchange’s selling the XRP token without obtaining prior registration with the regulator. 

While Ripple and XRP are closely related, they are technically separate entities, with Ripple being the issuer of XRP and the developer of the Ripple network.

Ripple insists that XRP is a digital currency rather than a security. According to the company, XRP’s utility as a currency for global payments makes it different from other cryptocurrencies, which primarily serve as investments.

XRP is a digital asset that functions as a bridge currency in the Ripple network. It allows users to convert between different currencies in real-time. Ripple, on the other hand, is a technology company that has developed a suite of blockchain-based solutions for cross-border payments, including its flagship product, On-Demand Liquidity (ODL).

ODL leverages XRP to facilitate instant cross-border payments, offering a faster and cheaper alternative to traditional correspondent banking.

The SEC has taken a firm stance on crypto under chair Gary Gensler. It has pursued legal action against other prominent crypto companies besides Ripple. Often, the complaint boils down to the same issue: what is or is not a security?

Recently, the SEC forced Kraken to stop offering its staking service for selling unregistered securities. Additionally, the regulator has notified Coinbase that it intends to sue them for alleged securities law violations. These actions have aroused alarm in the crypto industry, with some experts and leaders warning that it may push companies outside the US.

Coinbase CEO Brian Armstrong is among the most vocal of the latter voices. His firm has already announced the launch of a derivatives exchange catering to non-US investors. And in comments on Monday, he hinted at a possible move to the United Arab Emirates.

Ignoring such voices, the SEC applies dated regulations based on the 1946 Howey Test, used to determine whether something is a security or not. Largely on the basis of whether an investment contract exists.

The post Ripple CEO Puts Legal Costs in SEC’s Lawsuit North of $200 Million appeared first on BeInCrypto.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

98 +