In December, the Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency company Ripple. The lawsuit resulted in massive losses to Ripple and the company’s digital token XRP plunged from $0.64 per token to $0.22 in January.
The SEC alleged Ripple’s board of executives of selling unlicensed XRP. Accordingly, cryptocurrency exchanges restricted trading in XRP — forcing the CEO of Ripple Brad Garlinghouse to consider relocating his business to Japan.
Nevertheless, Ripple has been seeking the help of former SEC chair Mary Jo White to defend themselves. White had headed the SEC for 4 years and is currently working as Ripple’s attorney.
In an interview with Fortune, White accused the Securities and Exchange Commission of being “dead wrong” about Ripple. She added that the SEC made a blender after alleging the cryptocurrency company of selling unlicensed securities.
“There’s no way to sugarcoat it. They’re dead wrong legally and factually,” White said.
According to White, the timing of the lawsuit is alarming. The SEC file coincided with the agency’s former chair Jay Clayton’s departure. White Argued that the SEC had spent years investigating Ripple and that figuring out a case after this long time is telling.
“As a former U.S. attorney and SEC chair, you know that when it takes that long to figure out a case you probably shouldn’t be bringing it. It’s not something I would do walking out the door,” she said.
The SEC alleged Ripple CEOs of illegally selling XRP
The SEC lawsuit argued that senior executives including Chris Larsen and CEO Brad Garlinghouse profited from selling XRP for their personal benefit. The U.S. agency added that Ripple’s goal has been to lure investors into buying XRP as a speculative investment.
However, White responded that the argument is misleading and that the Securities and Exchange Commission’s failure to develop a regulatory framework for cryptocurrency has pushed it to “fit a round peg in a square hole.” White wanted to prove her point — saying that the Securities and Exchange Commission also declared that Ethereum is not a security.
In conclusion, the SEC lawsuit against Ripple doesn’t seem like it will be resolved soon. White suggested that a summary judgment from a federal court should happen in October to be able to solve the case.
White hinted that the Securities and Exchange Commission chair Gary Gensler is likely to take a personal interest in the Ripple vs SEC lawsuit.
“You have scarce resources [as chair], and you have to pick your spots. The crypto-landscape is a critical one, and there’s a crying need for clarity,” she said.