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Brad Garlinghouse, the Ripple CEO has criticised the US SEC over hypocrisy in handling crypto regulations. The remarks were made amidst the recent events in the SEC’s lawsuit against Binance where the regulatory body wanted to alter the initial complaint.
On Tuesday, the SEC and the defendants — Binance Holdings Ltd., BAM Trading Services Inc., BAM Management US Holdings Inc., and Changpeng Zhao (CZ) — submitted a joint response to the court’s earlier order. The SEC announced its intention to amend its complaint to address issues concerning “Third Party Crypto Asset Securities,” having previously classified several crypto assets as securities.
SEC’s Inconsistent, Confusing Regulatory Practises
Garlinghouse criticized the SEC over inconsistent and confusing regulatory practices and mentioned the SEC’s hypocritical approach noting that the SEC Chair Gary Gensler said that the rules are clear, but the SEC does not appear to be able to enforce them consistently.
Garlinghouse highlighted the contradiction between SEC Chair Gary Gensler’s statements and the agency’s actions. In a post on X, he stated- “A political agenda and/or bad faith litigation tactics. Definitely not a ‘faithful allegiance to the law.”
This action by the SEC was in an attempt to prevent a courtroom ruling on whether SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI are securities under the Howey Test.
The SEC’s filing noted that it plans to move to alter the complaint to address “Third Party Crypto Asset Securities” concerns so as not to necessitate an immediate court ruling on the matter. Binance pointed out that the SEC’s decision to amend the complaint indicates that the possible changes are not limited to the tokens in the case.
The Growing Regulatory Uncertainty!
Garlinghouse’s comments highlight the growing frustration in the cryptocurrency industry over regulatory uncertainty.
The Ripple CEO has consistently stressed the urgent need for consistent and transparent regulations to support industry growth and innovation. The company’s legal battle with the SEC, focusing on whether XRP is a security, led to a landmark ruling in July 2023. Other companies, including Coinbase, have also been actively striving for regulatory clarity to create a more stable and predictable environment for the crypto industry.
SEC’s Actions Sparks Debate Amongst Legal Experts
Top legal experts have also voiced their opinions over the SEC’s recent actions. Ripple’s CLO Stuart Alderoty pointed out that this move leaves the tokens vulnerable in other cases. He noted that the agency cannot disregard these tokens in one case while pursuing them in another. Jake Chervinsky, CLO at Variant Fund, also mirrored this sentiment and sees SEC’s move as a litigation tactic, and not a policy shift.