The Other side of SEC vs. Ripple Case: Congressman Lynch Claims Gensler Won
- Massachusetts Congressman Stephen Lynch claims Ripple lost a legal battle against the SEC
- Lynch rejected criticisms of the SEC’s “regulation by enforcement” strategy toward cryptocurrency startups
- He referenced the SEC’s track record of victory in 130.5 of 131 litigation brought under Gensler’s direction
In 2020, Bradley Garlinghouse and Christian Larsen, two of Ripple Labs’ senior executives, were charged by the United States Securities and Exchange Commission (SEC) with marketing and selling securities in an unauthorized manner. Judge Analisa Torres, a district judge in the United States District Court for the Southern District of New York, presided over the case.
Judge Torres’ ruling, made on 13 July 2023, in effect, found that XRP was a security if it was sold directly to investors, but was not a security when it was bought on exchanges.
Congressman Lynch’s Evaluation of the SEC’s Crypto Regulation Strategy
On 18 July, U.S. Representative Stephen F. Lynch told a hearing of the U.S. House Committee on Financial Services that the SEC was enforcing the law correctly.
The Massachusetts congressman said: “I want to address the claim that the SEC has been exercising regulation by enforcement as if there are no guidelines out there that these crypto firms would be bound by. Mr [SEC chairman Gary] Gensler at the SEC has brought 131 cases. One hundred thirty-one cases, and he’s won 130 and a half if you count the Ripple case last week. So … the SEC is regulating by the application of law, right?“
A Need for Bipartisan Cooperation in the Crypto Landscape
Lynch’s remarks have drawn criticism from the XRP community.
On 26 July, John Deaton, a lawyer who was actively following the lawsuit, tweeted
Deaton also emphasized the diversity of the cryptocurrency community. He said that his 75,000 XRP investor clientele represents a diverse range of political viewpoints, supporting his case for treating cryptocurrency as a nonpartisan issue.
He stressed the need for continued bipartisan support for the cryptocurrency sector and warned that choices taken today could have a significant impact on the future of cryptocurrency.
It’s important to keep in mind that XRP was not entirely recognized as a security, despite Lynch’s claims. This, supporters of legislation claim, underlines the urgent requirement for a clear, thorough, and just regulatory framework that can keep up with the expansion of cryptocurrencies in the United States, the country with the largest cryptocurrency industry worldwide.
Ripple Is Still Optimistic
Stuart Alderoty, the chief legal officer of Ripple, dismissed worries about a potential SEC appeal of the key Ripple decision. Alderoty said that the court might further bolster Ripple Labs’ partial victory if the SEC decided to appeal.
Regulations Terms
The specifics of the SEC’s appeal is not the only thing that will have an impact on Ripple. The wider regulatory framework developed by the American government will also be crucial.
The proposed legislation attempts to regulate stablecoins and designate cryptocurrencies as commodities or securities. Congress will vote for the first time on proposals regulating cryptocurrencies, and it is unclear whether the proposals will have enough support.
The Republican-led plan was earlier approved by the House Financial Services Committee on a party-line vote of 35–15. Jim Himes and Ritchie Torres, two Democrats, voted in favor of it as well, citing problems with the current system.
Senator Sherrod Brown’s doubts about the necessity of more cryptocurrency regulation could make it difficult for the bill to pass in the Democratic-led Senate.
Republican committee chair Patrick McHenry prioritizes passing legislation relating to the cryptocurrency market structure. The law should clarify the SEC’s authority and increase the Commodities Future Trading Commission (CFTC)’s control in order to allay worries about perceived overreach.
How these events affect XRP in the long run will only become clear with time. At the time of writing, XRP was trading at $0.71 , following some recent upward movement. Additionally, during this time, more people were holding the coin.
