Ripple chief executive Brad Garlinghouse says his company is “confident” moving toward the possible conclusion of its court battle against the U.S. Securities and Exchange Commission (SEC).
Garlinghouse says in a new interview on CNBC that his team thinks the law is clear.
“You have to remember that 99.9% of XRP trading has nothing to do with Ripple the company. So when you talk about, okay, ‘XRP’s a security,’ I go back to something I said years ago when they started: ‘A security of what company? Who is the owner?’ I think it’s very clear there is no investment contract.
If you get past the investment contract, which I think is hard, across the Howey Test, you have to meet all three prongs, and in the case of the XRP case, you can’t meet all three prongs for sure. And so we think that the judge will see that the law is very clear, we think the facts are very clear, we think this is just a gross overreach of the SEC trying to wrest control of that uncertainty that has existed.”
The Howey test was created by the Supreme Court to determine if an asset is a security based on whether or not investors expect to earn profits derived from the efforts of others.
Garlinghouse thinks the lawsuit against Ripple is a “bellwether case” that could compare to the SEC v. W.J. Howey Co. case, which is credited with the creation of the Howey test.
“I think the ‘Ripple Test’ may be what we look at in the future. There are a lot of facts and circumstances that can be unique, but for Ripple, and what the SEC is trying to do, I do think it’s just the SEC trying to overreach the statute.”
The SEC sued Ripple in late 2020 under allegations that it issued XRP as an unregistered security. Both Ripple and the SEC have recently filed motions for a summary judgment. The moves essentially ask the judge to pick a side and end the trial without going to a jury.
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