John Deaton

The crypto industry has ‘already started’ moving outside US, says Ripple CEO

Ripple’s CEO Brad Garlinghouse said the SEC’s lawsuit against Ripple is the regulator playing “offense” and “attacking” the industry as a whole.

The United States Securities and Exchange Commission’s (SEC) regulation through “enforcement” is not a “healthy way” to regulate an industry, and may result in the U.S. being a less attractive location for crypto firms, suggests Ripple’s CEO.

In a March 3 Bloomberg interview, Brad Garlinghouse, CEO of blockchain-based digital payment network Ripple, suggested that the SEC’s regulation approach puts the U.S. at “severe risk” of missing out on being an attractive hub for the next evolution of blockchain and crypto innovation.

Garlinghouse noted that the SEC’s case against Ripple is the SEC simply playing “offense” and “attacking” the industry as a whole, adding that if the SEC is “able to prevail,” there will be “a lot of other cases.”

He suggested that the crypto industry has “already started moving outside” of the U.S., given its crypto regulation process is “behind” other countries like “Australia, the United Kingdom, Japan, Singapore and Switzerland.”

He commended these countries for taking “the time and thoughtfulness” to create “clear rules of the road,” adding that the approach taken by the U.S. is not a “healthy way to regulate an industry.”

Garlinghouse recalled when he “first got into the tech industry in the late 90s,” there were proposals to ban the internet due to “illicit activity,” but the government refuted the idea and decided to “create a framework.”

He emphasized “the benefits” this early adoption brought on a “geopolitical basis,” to have the “Amazon’s and Google’s” based in the U.S., suggesting that the same opportunity is currently on the table with creating a framework for crypto.

Garlinghouse believes the framework process should begin with outlining “clear protections for consumers.”

He added that consumers are suffering from the “lag,” as they lack the “same protection” that regulatory frameworks “can provide.“

Garlinghouse believes that a decision should come this year in the SEC’s case against Ripple.

Related: Ripple survey: 97% of payment firms believe in the power of crypto

More recently, John Deaton, founder of legal news outlet Crypto Law Lawyer put a call to action to his 245,000 Twitter followers on March 5, stating that all companies in “active litigation” with the SEC should collaborate and develop “coordinated strategies,” calling it “war.”

This comes after Kristin Smith, CEO of the Blockchain Association, told Bloomberg in a Feb. 22 interview that the crypto regulation process in the U.S. is happening “behind closed doors,” adding that it is vital for more industry involvement in an “open process.”

Sam Bankman-Fried still speaking at events and the community is furious

The former FTX CEO said he will be speaking at a conference by The New York Times, the same outfit that wrote the recent puff piece on Bankman-Fried.

Former FTX CEO Sam Bankman-Fried has once again attracted the ire of the crypto community — this time over his slated appearance at an upcoming New York City conference on Nov. 30. 

Vocal members of Crypto Twitter have questioned why the former CEO of the now-bankrupt exchange continues to walk free, given the events over the last month.

In a Nov. 23 Twitter post, Bankman-Fried announced he will be speaking with The New York Times journalist Andrew Sorkin at the DealBook Summit “next Wednesday.”

The news was confirmed publicly by Sorkin, who said: “There are a lot of important questions to be asked and answered. Nothing is off limits.”

In the wake of the FTX collapse, some in the community had wondered whether Bankman-Fried would honor his conference engagements, including his one at the DealBook Summit.

A spokesperson for The New York Times confirmed to Cointelegraph that Bankman-Fried was invited to its DealBook Summit several months ago — well before the FTX crash — and that he’d likely be participating in the interview virtually from the Bahamas, stating: 

“We invited Mr. Bankman-Fried to be interviewed at the Summit several months ago. At this time, we expect Mr. Bankman-Fried will be participating in the interview from the Bahamas.”

According to a Gawker report dated Nov. 11, Bankman-Fried was previously listed on the speaker page as “C.E.O, FTX.” However, the speaker page now shows his title has since been updated to “Founder, FTX” — reflecting his resignation from the role since FTX’s bankruptcy filing. 

Sam Bankman-Fried listed at the top of the speakers page of the DealBook Summit. Source: The New York Times

Crypto Twitter responds

Some members of the crypto community have not taken the news well, with remarks that Bankman-Fried should be in custody instead of speaking freely at conferences.

U.S. Attorney John Deaton and founder of Crypto Law remarked to his 229,300 Twitter followers that if U.S. law enforcement doesn’t arrest and charge Bankman-Fried — who’s currently situated in the Bahamas — for fraud and theft offenses if he enters the U.S. next week, then the justice system “has been compromised.”

British media personality and Bitcoin proponent Layah Heilpern told her 328,200 Twitter followers that “it’s disgusting” that Bankman-Fried will be speaking on stage and instead isn’t being held in custody.

Ryan Adams, founder of investment firm Mythos Capital and Bankless took things one step further in comparing the arrest and three-month-long detainment of Alexey Pertsev — the core developer behind the now U.S.-sanctioned Tornado Cash — to Bankman-Fried’s unfathomable conduct, which has yet to be investigated.

Meanwhile, chairman of Real Bedford FC and Bitcoin proponent Peter McCormack joked that Bankman-Fried would receive “a Nobel Prize at this rate.”

Related: Will SBF face consequences for mismanaging FTX? Don’t count on it

The New York Times was recently criticized by the crypto community for writing a “puff piece on SBF,” which appeared to only brush over Bankman-Fried alleged fraud and crimes and instead focused on whether he was getting enough sleep. 

As for Bankman-Fried’s current whereabouts, Crypto Crib posted pictures to its 66,900 Twitter followers late on Nov. 23 of what appears to be Bankman-Fried eating a meal with his mother and several others at his Bahamas penthouse.

On Nov. 23, U.S. Attorney General Merrick Garland, Merrick’s assistant Kenneth Polite and U.S. Senators Elizabeth Warren and Sheldon Whitehouse requested for the U.S. Department of Justice to launch a full-scale investigation into Bankman-Fried and other FTX executive’s roles in the collapse of FTX.

Update 2:30am UTC Nov. 24: Added a statement from a spokesperson at The New York Times.

Ripple, SEC case heads for conclusion after ‘summary judgment’ filed

Ripple argued that XRP profits came from “market forces of supply and demand” rather than any contract between Ripple and XRP token holders.

The U.S. Securities and Exchange Commission (SEC) and Ripple Labs have both called for a federal judge to make an immediate ruling on whether Ripple’s XRP sales violated U.S. securities laws.

In separate motions filed on Sept. 17 by Ripple and the SEC, both have called for a summary judgment in the U.S. District Court Southern District of New York. 

Summary judgments are submitted to the courts when a party involved believes there’s enough evidence at hand to make a ruling without the need to proceed to trial.

Both parties have called on Judge Analisa Torres to make an immediate ruling as to whether Ripple’s XRP sales violated U.S. securities laws. Ripple has argued that the SEC has run out of answers to prove XRP sales constituted an “investment contract,” while the SEC has held strong on its beliefs that it does. 

Ripple CEO Brad Garlinghouse in a Twitter post on Sept. 17 said the filings made it clear that the SEC “isn’t interested in applying the law.”

“They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress,” he said.

Meanwhile, Ripple general counsel Stuart Alderoty noted that “after two years of litigation” the SEC is “unable to identify any contract for investment” and “cannot satisfy a single prong of the Supreme Court Howey test.”

In its motion for summary judgment, Ripple claimed that the SEC’s case “boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset.”

The motion also argued that the SEC cannot establish that XRP token holders could not “reasonably expect profits” based on Ripple’s efforts as there were no contract obligations between Ripple and XRP token holders.

On the other hand, the SEC’s own motion for summary judgment argued that there can be an “investment contract” without a contract, any rights granted to the purchaser, and without any obligations to the issuer.

But Ripple argued in its motion “that is not and should not be the law, because without these essential features there is nothing to which the Howey test can sensibly be applied.”

Related: The SEC vs. Ripple lawsuit: Everything you need to know

Ripple instead pointed to profits coming from “market forces of supply and demand,” something that the SEC “conceded” according to the Ripple motion.

The significance of this admission was highlighted by U.S. Attorney Jeremy Hogan in a Sept. 17 post on Twitter, stating that “these concessions are perfect for a summary judgment.”

Community reaction

The filing of the Ripple and SEC motions brought about mostly positive sentiment from the XRP community, with one Twitter user believing “the end is near”:

The motion for summary judgment comes nearly two years after the SEC sued Ripple, former CEO Christian Larsen and current CEO Brad Garlinghouse in Dec. 2020 for allegedly raising $1.3 billion through unregistered securities sales through XRP.

If the court executes the summary judgment, the court ruling will have a profound impact on determining which cryptocurrencies constitute a security under U.S. securities laws.

The XRP token rose to highs not seen since July following the motion filing — reaching nearly $0.40, but has fallen slightly since then and is currently priced at $0.34, according to CoinGecko.

Ripple, SEC case heads for conclusion after ‘summary judgment’ filed

Ripple argued that XRP profits came from “market forces of supply and demand” rather than any contract between Ripple and XRP tokenholders.

The United States Securities and Exchange Commission (SEC) and Ripple Labs have both called for a federal judge to make an immediate ruling on whether Ripple’s XRP sales violated U.S. securities laws.

In separate motions filed on Saturday by Ripple and the SEC, both have called for a summary judgment in the U.S. District Court Southern District of New York. 

Summary judgments are submitted to the courts when a party involved believes there’s enough evidence at hand to make a ruling without the need to proceed to trial.

Both parties have called on Judge Analisa Torres to make an immediate ruling as to whether Ripple’s XRP sales violated U.S. securities laws. Ripple has argued that the SEC has run out of answers to prove XRP sales constituted an “investment contract,” while the SEC has held strong on its beliefs that it does. 

Ripple CEO Brad Garlinghouse, in a Twitter post on Saturday, said the filings made it clear that the SEC “isn’t interested in applying the law.”

“They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress,” he said.

Meanwhile, Ripple general counsel Stuart Alderoty noted that “after two years of litigation,” the SEC is “unable to identify any contract for investment” and “cannot satisfy a single prong of the Supreme Court Howey test.”

In its motion for summary judgment, Ripple claimed that the SEC’s case “boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset.”

The motion also argued that the SEC cannot establish that XRP tokenholders could not “reasonably expect profits” based on Ripple’s efforts as there were no contract obligations between Ripple and XRP tokenholders.

On the other hand, the SEC’s own motion for summary judgment argued that there can be an “investment contract” without a contract, any rights granted to the purchaser and without any obligations to the issuer.

But, Ripple argued in its motion, “that is not and should not be the law, because without these essential features there is nothing to which the Howey test can sensibly be applied.”

Related: The SEC vs. Ripple lawsuit: Everything you need to know

Ripple instead pointed to profits coming from “market forces of supply and demand,” something that the SEC “conceded,” according to the Ripple motion.

The significance of this admission was highlighted by U.S. Attorney Jeremy Hogan in a Saturday post on Twitter, stating that “these concessions are perfect for a summary judgment.”

Community reaction

The filing of the Ripple and SEC motions brought about mostly positive sentiment from the XRP community, with one Twitter user believing “the end is near:”

The motion for summary judgment comes nearly two years after the SEC sued Ripple, former CEO Christian Larsen and current CEO Brad Garlinghouse in Dec. 2020 for allegedly raising $1.3 billion through unregistered securities sales through XRP.

If the court executes the summary judgment, the court ruling will have a profound impact on determining which cryptocurrencies constitute a security under U.S. securities laws.

The XRP token rose to highs not seen since July following the motion filing — reaching nearly $0.40, but has fallen slightly since then and is currently priced at $0.34, according to CoinGecko.