In a dramatic turn of events, Brad Garlinghouse, the CEO of Ripple, took a public stance against Jay Clayton, the former Chairman of the Securities Exchange Commission (SEC). His criticisms stem from Clayton’s recent CNBC interview where he advised regulatory agencies to only pursue legal cases they are confident will hold up in court.
Garlinghouse’s Counter Argument
“Clayton himself filed a lawsuit with flimsy legal standing,“ Garlinghouse noted, referring to the SEC’s 2020 lawsuit against Ripple. In this suit, the SEC alleged that Garlinghouse and Ripple founder Chris Larsen had engaged in an “unregistered, ongoing digital asset securities offering,“ purportedly raising over $1.3 billion. This claim was eventually dismissed by the SEC without prejudice, yet it’s striking how it contradicts Clayton’s recent counsel on legal prudence.
Timeline of Events
- December 2020: SEC files lawsuit against Ripple, accusing the company and its executives of unauthorized securities offerings.
- June 2021: Jay Clayton’s term as SEC Chair ends.
- June 29, 2023: Clayton advises SEC on CNBC to only pursue strongly-backed legal actions.
- Q3 2023: SEC starts taking various regulatory actions against crypto companies.
- Recent Developments: Charges against Ripple and its executives are dropped.
Quotes Speak Volumes
Garlinghouse was particularly incensed that Clayton’s public statements came after the charges against Ripple were dropped. “It’s ironic that the person advising caution is the same one who initiated a lawsuit with scant chance of success,“ said Garlinghouse.
Former and Current SEC Approaches
The SEC has lately been proactive in its regulatory measures against crypto companies, beginning in Q3 2023. Clayton’s recent comments suggest a conservative approach, which raises questions given the lawsuits filed during his tenure, especially the one against Ripple.
In summary, Brad Garlinghouse’s criticism sheds light on the seeming inconsistencies between Clayton’s advice and actions. As the SEC continues to ramp up its regulatory initiatives, the agency’s former and current approaches appear to be on a collision course, and the Ripple case may well serve as a cautionary tale for both sides.
