Ripple CEO Brad Garlinghouse has issued a stark warning about the potential fallout from the SEC’s ongoing lawsuit against his company, predicting a “shit show” for the crypto industry if the regulator prevails on a key legal argument. His comments came during a recent interview with Anthony Pompliano, also known as Pomp, where Garlinghouse addressed Ripple’s recent cross-appeal and criticized the SEC’s handling of Bitcoin ETFs.
The core of the dispute revolves around the definition of an “investment contract” under the Securities Act. Ripple’s cross-appeal seeks clarity on whether such a contract requires an explicit, formal agreement. Garlinghouse argued that an SEC victory on this point would have disastrous consequences, pushing more crypto activity offshore. “If the SEC were to prevail on this point,” he stated, “it is a shit show for the industry.”
Pomp raised the question of how a ruling against Ripple could impact platforms like Coinbase, which list various crypto tokens. If these tokens are deemed investment contracts, it could significantly alter the regulatory landscape for exchanges.
Garlinghouse also took aim at the SEC’s handling of Bitcoin ETFs, arguing that the agency deserves little credit for their eventual approval. “They approved the ETF kicking and screaming,” he said. “They were dragged to court. They were forced to do it, and if they get credit for approving the Bitcoin ETFs, that is BS.”
Despite the ongoing legal battle, Garlinghouse expressed optimism about Ripple’s future, particularly regarding the growing interest from institutional investors. He highlighted Ripple’s recent Swell event, where the company engaged with major global banks to discuss the use of digital assets.
Garlinghouse’s optimism extends beyond Ripple’s core payments business. He revealed that the company is expanding into both custody services and the stablecoin market. “We’re now in the custody business, we’re actually getting into the stablecoin business,” he shared. “You know, there’s a lot to be optimistic about.”
When asked for a positive comment about SEC Chair Gary Gensler and the agency, Garlinghouse offered a wry observation: “There’s gonna be a new SEC chair.”
