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Gary Gensler, widely expected to be the next chairman of the U.S. Securities and Exchange Commission, believes Ripple’s legal battle with the SEC could have a wide-reaching impact on the crypto industry.
In an interview back in 2018, Gensler said he believes other crypto projects will likely be directly impacted by the case – regardless of the outcome.
“Let me say this, if [the courts] decide that they’re not securities, I think that too probably ends up in court. And the reason is because somebody else will say, ‘Why are they getting out of regulation and I’m not?’
Gensler himself has consistently argued that he believes XRP is a noncompliant security.
“Ripple the company is exchanging XRP for something of value, and they’re using it right now – they sell it every month, it’s in a lockup, there’s an escrow, and they sell XRP every month. Ripple the company initially did the genesis block back in 2013 but kept 80% of the tokens.”
Multiple news reports indicate President-elect Joe Biden will pick Gensler, the former chairman of the Commodity Futures Trading Commission, to lead the regulatory agency.
Ripple owns more than half of the total supply of XRP. In December of 2017, the startup pledged not to sell all of its tokens at once, locking up 55 billion XRP into a series of cryptographically secured escrow accounts.
The company then set up a schedule to release one billion XRP each month, sell a portion to fund its operations and invest in startups, and return the rest back into escrow.
The SEC now alleges Ripple illegally sold XRP as an unregistered security upon its launch, and maintains that the digital asset is a security to this day. A pretrial hearing on the case is set for next month.