Ripple CEO Slams SEC for Creating a 'Mess' in Crypto Industry

In Brief

• Ripple CEO Brad Garlinghouse said the SEC created "mess" with its approach to the crypto industry which left retail users unprotected.
• The SEC and its chairman, Gary Gensler, has hinted that it would appeal Judge Analisa Torres's decision about its case against XRP soon.
• Pro-Ripple lawyers have argued that Judge Torres's ruling presents a significant setback for SEC's attempt to regulate the crypto industry.

Ripple CEO Brad Garlinghouse has called for legislation to protect crypto retail users while criticizing the U.S. Securities and Exchange Commission (SEC) for assuming authority over the industry without legal jurisdiction.
Garlinghouse described Judge Anaalisa Torres ruling as a faithful application of the law but noted that only legislation could provide clarity that would “provide clear rules and protect retail.”

“An important topic has come up about protecting retail. The SEC created this mess by proclaiming it was the cop on the crypto beat when it had no legal jurisdiction Where’s that gotten us? Consumers left holding the bag in bankruptcy court while the SEC holds press conferences.”

SEC Hints at Ripple Appeal
Meanwhile, the SEC has hinted that it will appeal Judge Torres’s ruling, arguing that the decision was wrongful. The regulator stated that its staff is considering all the available options to review the ruling and will recommend that the SEC seeks such a review.

SEC Chair Gary Gensler has also expressed disappointment with the partial ruling that favored Ripple. He said he is pleased that the court agreed that the sale of XRP to institutions constitutes an unregistered securities offering.

This has led to speculation that it is only a matter of time before the SEC appeals the decision.

Lawyer Explains Why an Appeal is Not a Setback
Pro-Ripple lawyer John Deaton does not consider the SEC’s potential appeal of the Ripple decision to be a setback to the industry.

Deaton noted that such an appeal would take at least two years before the 2nd Circuit issues a decision. Throughout the period, Judge Torres’s decision will remain the law.

He added that even if the Appeal Court ruled that the judge was wrong in applying the third element of the Howey test, it does not mean a win for the SEC on Programmatic sales because the judge can still apply the other two factors and rule the same way.

“Don’t let anyone underestimate how significant this win is,” he told XRP holders.

However, Deaton pointed out that while Torres’s decision does not bind any other district judge, he believes no judge will disagree with the ruling.

Another pro-XRP attorney Jeremy Hogan also agreed with this view. While speaking on a YouTube interview, he said that an appellate court would find it difficult to overrule the decision because Judge Torres made factual determinations based on the Howey Test.

Meanwhile, several U.S. lawmakers, including Reps Patrick McHenry and Ritchie Torres, have urged the SEC to change its approach to crypto regulation.

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