TLDR:
- Ripple co-founder Chris Larsen calls SEC Chair Gary Gensler “worst public servant of all time” in new CNBC appearance
- Legal dispute between SEC and Ripple continues since 2020, involving token sales classification
- Mixed ruling in July 2023 favored Ripple on retail sales but found institutional sales violated securities law
- Both SEC and Ripple filed appeals in October 2023
- Gensler’s MIT blockchain background contrasts with his strict regulatory approach
A new chapter has opened in the crypto regulatory saga as Ripple co-founder Chris Larsen delivered pointed criticism of SEC Chair Gary Gensler during a CNBC interview.
Larsen’s characterization of Gensler as “the worst public servant of all time” marks a fresh escalation in the already tense relationship between the blockchain company and its regulators.
The statement comes as part of an ongoing legal dispute that began in December 2020. At that time, the SEC filed charges against Ripple Labs and its executives, including Larsen and CEO Brad Garlinghouse, over the classification and sale of XRP tokens.
.@Ripple Chairman Chris Larsen calls Gary Gensler
The worst public servant in U.S. history 🤣 pic.twitter.com/1jQyG5FbJN
— 𝗕𝗮𝗻𝗸XRP (@BankXRP) October 26, 2024
Legal proceedings took a turn in July 2023 when a court delivered a split decision. The ruling determined that Ripple’s sales to retail investors through cryptocurrency exchanges did not violate securities laws. However, the same ruling found that the company’s direct sales to institutional investors did breach these regulations.
Following this mixed verdict, both parties have chosen to continue the legal battle. The SEC submitted an appeal in October 2023, filing Form C documentation to pursue further action against Ripple’s executives. Ripple responded with its own cross-appeal, with company leaders stating they would mount a comprehensive defense.
The dispute has taken on a personal dimension, according to Garlinghouse. The Ripple CEO has claimed that the SEC’s actions appear aimed at causing personal harm to both him and Larsen, rather than merely addressing regulatory concerns.
XRP, the cryptocurrency at the center of the dispute, maintains a substantial presence in the digital asset market with a capitalization of $29.2 billion. This valuation persists despite the ongoing regulatory challenges faced by Ripple.
During the CNBC interview, Larsen expanded his criticism beyond Gensler to include Federal Trade Commission head Lina Khan. However, when asked about potentially removing Gensler from his position, Larsen stopped short of making any direct calls for leadership changes.
The situation carries extra weight due to Gensler’s background. Before taking the SEC position, he taught blockchain technology courses at MIT, leading many to expect a more nuanced approach to crypto regulation. Instead, his tenure has been marked by strict enforcement actions against various cryptocurrency enterprises.
Ripple’s legal team has maintained that XRP should not be classified as a security, pointing to previous statements from SEC officials to support their position. This argument forms a key part of their defense strategy as the appeals process moves forward.
The October 2023 developments have shown both sides digging in for a prolonged legal battle. The SEC’s appeal indicates its determination to pursue the case against Ripple’s executives, while Ripple’s cross-appeal suggests equal resolve in fighting these charges.
Beyond Ripple, Gensler’s SEC has taken action against other major crypto industry players, including Binance and Coinbase. This broader pattern of enforcement has led to increased criticism from various sectors of the cryptocurrency community.
Garlinghouse has been particularly vocal about the SEC’s regulatory approach under Gensler. He has criticized the agency not only for its stance on cryptocurrency innovation but also for its failure to prevent major industry crises, such as the collapse of the FTX exchange.
The latest exchange of legal filings indicates that both parties are preparing for the next phase of their confrontation. The SEC maintains its position on securities law violations, while Ripple continues to defend its token sales practices.
During his interview, Larsen connected his criticism to broader concerns about cryptocurrency policy in the United States. He also mentioned his support for Kamala Harris’s campaign, though the implications of this support were not fully explored.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
