Brad Garlinghouse believes the SEC will lose the war against Ethereum, as it lost against XRP.
Ripple CEO Brad Garlinghouse has taken to the X platform to react to reports of the U.S. SEC pursuing a legal campaign to classify Ethereum (ETH) as a security.
In an X post today, Garlinghouse emphasized that the SEC has suffered significant losses in courts while trying to engage the crypto industry in legal disputes.
He added that since the regulator has not successfully won its fight against the industry, it is now engaging in legal disputes with its sister agency, the U.S. CFTC.
Garlinghouse raised a rhetorical question asking when the SEC would recognize that it would lose the war to classify ETH as a security as it did against XRP.
The SEC picked fights with the industry and is losing badly in the Courts. They’re now fighting fellow regulators like the CFTC, and falling behind international counterparts. At what point will the SEC realize they will lose the war against ETH just as they lost against XRP? https://t.co/rG66npldf4
— Brad Garlinghouse (@bgarlinghouse) March 21, 2024
The Ripple CEO made this known while reacting to Coinbase’s CLO Paul Grewal’s comment on the matter. As reported yesterday, Grewal declared support for Ethereum and highlighted some facts showing why ETH is not a security.
SEC Failed to Classify XRP as a Security
It bears mentioning that the SEC was unsuccessful in its attempt to categorize XRP as a security. Recall that the SEC attempted to place XRP under its jurisdiction in 2020 when it charged Ripple with offering the coin as an unregistered security to U.S. investors.
The regulator maintained this theory for over two years until July 2023, when U.S. District Judge Analisa Torres declared that XRP is not a security in itself.
Judge Torres also held that most XRP-related transactions conducted by Ripple, including programmatic sales and other distributions, did not constitute investment contracts- a special type of security.
Conversely, the SEC recorded a major victory in the summary judgment when the court found that Ripple violated the law through its institutional sales of XRP. The penalty for the violation will be addressed in the remedies phase of the case.
Notably, the SEC will file its opening brief regarding remedies today, March 22. However, the motion will remain sealed until March 26, when it will be filed in the public docket.
SEC Attempts to Elevate Itself as Main Regulator for Crypto
Meanwhile, since the SEC’s attempt to classify XRP as a security ended in futility, the commission has been on a campaign to place the entire U.S. crypto industry under its jurisdiction. To achieve this goal, the SEC has sued several exchanges, like Binance and Coinbase, while putting the securities tag on various crypto assets, including SOL, MATIC, and ADA.
Its latest attempt to label ETH as security has shocked crypto enthusiasts, given that the commission had previously admitted through its top officials that Ethereum does not fall under its regulatory purview.
Bill Hinman, former director of corporate finance, shared this sentiment in his infamous speech in 2018, in which he noted that ETH is not a security.
Based on its admission, the CFTC has operated under the notion that Ethereum, alongside Bitcoin, is a commodity. Consequently, ETH’s futures contracts have been listed on CFTC-registered exchanges, including the Chicago Mercantile Exchange (CME).
Hopes of Ethereum ETF Approval Fades
Should the SEC succeed in classifying ETH as a security, it would mitigate the chances of a spot-based Ethereum ETF launching anytime soon.
Crypto enthusiasts have been optimistic that the regulator would approve an ETF for Ethereum this year, as it did for Bitcoin in January.
Top experts projected that the approval would come by May 2024. However, investors’ hopes of seeing an Ethereum spot ETF launch in May are fading as the SEC moves to bring ETH under its regulatory purview.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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