Carlos Fernandes Ripple CEO Brad Garlinghouse has expressed his criticism towards the U.S. Securities and Exchange Commission (SEC) for its actions against the cryptocurrency industry. Following the release of the Hinman documents, which provide insight into internal discussions within the SEC prior to a significant speech by Director William Hinman in 2018, Garlinghouse accused the SEC of exploiting the lack of regulatory clarity and causing chaos within the entire industry.
In response to the recent disclosure of the Hinman documents, Ripple CEO Brad Garlinghouse has reacted strongly. These documents shed light on internal debates within the U.S. Securities and Exchange Commission (SEC) leading up to a speech made by William Hinman, the Director of the Division of Corporation Finance, in 2018.
Commonly referred to as the “Hinman docs,” they reveal internal disagreements and confusion within the agency regarding the classification of certain tokens and cryptocurrencies as securities. Ripple’s Chief Legal Officer, Stuart Alderoty, stated that Hinman disregarded some of the advice provided and delivered a speech that deviated from the Howey factors, exposing regulatory gaps and causing even greater confusion in the market.
Garlinghouse expressed his dismay at the fact that the regulator decided to proceed with the speech, disregarding substantial opposition and the questionable foundation of the “test” it was based on. He believes this decision has thrown the entire industry into chaos, which he finds unconscionable.
Moreover, Garlinghouse accused the SEC of leveraging the lack of regulatory clarity through enforcement actions following the Hinman speech. He characterized the SEC’s lawsuit against Ripple and himself as a deplorable, politically-motivated overreach.
This is not the first time Garlinghouse has criticized the SEC. He previously argued that the agency’s recent legal actions against Coinbase and Binance were intended to divert attention from its own issues with FTX.
Ripple has been engaged in a legal battle with the SEC since December 2020 when the agency filed a $1.3 billion lawsuit against the company, Garlinghouse, and co-founder Christian Larsen for conducting an unregistered digital asset securities offering.
Garlinghouse estimates that Ripple will have spent $200 million on its defense by the conclusion of the lawsuit. However, he believes that the outcome of this case is pivotal for the entire crypto industry, as he anticipates more enforcement actions if the SEC’s position prevails.
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