Ripple chief executive Brad Garlinghouse said believes the company’s lawsuit with the Securities and Exchange Commission (SEC) will conclude “in the first half of next year.”
“Whether that’s the first quarter, or second quarter, we shall see,” Garlinghouse said during an interview at DC Fintech Week.
The SEC first filed the lawsuit against Ripple, in addition to current CEO Garlinghouse and former CEO Chris Larsen, in Dec. 2020. The federal regulator accused the company of issuing its XRP token without properly registering it as a security, which the authority asserts that the digital asset is.
Garlinghouse said both sides have filed motions for summary judgment, meaning the case would be resolved by a judge before going to trial. He explained these would be fully briefed in front of the judge by mid-Nov., and that the judge would make an ultimate decision thereafter.
Admitting that it would be very hard to predict, optimistically Garlinghouse said it could be another three to four months before a decision was announced, but pessimistically, it could be much longer. “Federal judges work at their own pace,” Garlinghouse related.
Ripple won recent victory over release of SEC director notes
Ripple recently won a small victory over the SEC in a ruling last month. The judge ordered the SEC, for the sixth time, to relinquish notes on a 2018 speech made by then-SEC Director of the Corporate Finance Division, William Hinman.
In the speech, Hinman had argued that while Ethereum may have been a security, “based on my understanding of the present state of Ether, the Ethereum network, and its decentralized structure, current offers and sales of Ether are not securities transactions.”
A possible settlement maybe on the horizon
Asked whether Ripple would consider a settlement with the SEC, Garlinghouse replied, “as long as the settlement includes clarity that XRP is not a security, yes, absolutely.” However, the chief executive said that he believed the SEC “had painted itself into a corner,” with SEC Chair Gary Gensler’s public assertion that most cryptocurrencies are securities.
If this “conundrum” could somehow be resolved, and the SEC would agree to this condition, Garlinghouse said this would open the door for constructive negotiation. “Beyond that, everything is on the table,” he said.
Given the SEC’s penchant for transparency and disclosure, Garlinghouse lamented the authority’s unwillingness to cooperate with the industry to “provide clear rules of the road,” which he believes would enable the industry in the United States to thrive.
If the case takes a turn for the worse, and Ripple loses, Garlinghouse said this would not greatly affect the company, as it has “already been operating as if [it] lost,” given XRP’s loss of liquidity in the U.S. following its pervasive delisting with the lawsuit’s announcement.
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