On October 19, the US Securities and Exchange Commission (SEC) dismissed all its claims against Ripple’s CEO, Brad Garlinghouse, and Co-founder, Chris Larsen. Following this, Larsen called out the financial regulator, stating why it had to be held accountable for its actions.
Larsen Calls SEC A Rogue Administrative State
In a post shared on his X (formerly Twitter), Ripple’s co-founder Chris Larsen highlighted how the SEC seemed to have witch-hunted him and Garlinghouse with their baseless claims. He stated that the “rogue administrative state” had to be held accountable for this with an investigation into how the Commission’s “conflict of interest” may have led to those claims.
Furthermore, he stated that the Commission also had to be held accountable for the role it played in “actively” demolishing the country’s global standing as the “home for innovation,” with thousands of jobs having to move overseas.
In its press release, Ripple also noted how the regulatory uncertainty and chaos created by the “SEC’s misguided quest for power” had so far driven crypto innovation offshore. According to the crypto company, nearly 90% of its business is outside the US, with a majority of its workforce also not based in the country.
While there is no denying the fact that the SEC needs to be held accountable, the latest development represents a resounding victory for Ripple and the crypto industry, by extension. The Commission voluntarily dismissed the claims against Garlinghouse and Larsen with prejudice, meaning they can’t bring such an action against them again.
Specifically, this means that the SEC has chosen to adopt Judge Analisa Torres’ views that XRP isn’t a security in itself since the dismissal of these “obviates” the need for the scheduled trial. The SEC is now set to focus solely on the institutional sales which Judge Torres ruled were investment contracts.
A “Surrender” By The SEC
Reacting to the dismissal of the claims against Ripple’s executives, the company’s Chief Legal Officer Stuart Alderoty stated that the SEC made a “serious mistake” by going after Garlingouse and Larsen personally. He further stated that this wasn’t a settlement but a “surrender” by the financial regulator.
As to why the SEC might have surrendered, pro-XRP legal expert John Deaton suggested that the ETH Gate saga (most especially Hinman’s speech and emails) could have been a major factor. Speaking during an X Space, he mentioned how Hinman might have been called to testify if the case against Ripple’s executives had gone to trial.
Another pro-XRP legal expert, Fred Rispoli, had previously called it when he stated that the SEC was unlikely to drag Ripple’s executives through a trial, especially considering the fact that Hinman taking the stand could potentially put the SEC’s credibility into question.