Ripple’s CEO won’t apologize for taking on the SEC

“The SEC declared war on Ripple. We’re defending ourselves.”

Brad Garlinghouse

Ripple CEO Brad Garlinghouse isn’t apologizing for his company’s pugnacious stance with regulators.

Photo: Ripple

Ripple just bought back a huge chunk of its shares this week, which CEO Brad Garlinghouse touted as a sign of the crypto company’s momentum.

But he also used the opportunity to hit back at the agency that the crypto powerhouse considers its nemesis: the SEC.

“Despite these crazy headwinds with the SEC — and frankly, losing some customers because of the SEC lawsuit — we grew very quickly, and we feel like we're starting 2022 in a great position of strength,” Garlinghouse told Protocol.

The company is embroiled in a lawsuit, filed in 2020, in which the agency accused Ripple of raising $1.3 billion in unregistered digital-asset securities by issuing XRP tokens. The SEC's key claim is that XRP is not a currency, but a security, and therefore subject to strict securities laws. Ripple has argued that XRP is a virtual currency, not an investment contract.

In an interview with Protocol, Garlinghouse discussed why the share buyback makes sense, the growing worries about another crypto winter and why the SEC and crypto critics are wrong to portray the industry as the “Wild West.”

This interview has been edited for brevity and clarity.

Why buy back shares?

A lot has changed in the crypto world in the last two years since we did this [funding round]. Overall asset values have grown from about $200 billion to about 8x that today. Ripple’s business has materially grown. So despite these crazy headwinds with the SEC — and frankly, losing some customers because of the SEC lawsuit — we grew very quickly, and we feel like we're starting 2022 in a great position of strength.

We have over a billion dollars of cash on the balance sheet today. We're super excited about where things are going. We had this opportunity to repurchase shares at a $15 billion valuation. We obviously thought that it was a good use of capital for all shareholders.

You’re still in a battle with the SEC. How do you see the regulatory challenges unfolding this year?

If you step back at 100,000 feet, the regulatory climate globally has actually trended extremely positively over the last five years. You see that the trend line for most major markets recognizes that digital assets can and will play a role in the future financial system and that that's to the benefit of consumers, the benefit of businesses, the benefit of even governments.

If you look at it at a very high level, countries like the United Kingdom, Switzerland, Japan, Singapore have all provided very constructive frameworks. Yes, there's regulatory oversight, but they're actually encouraging that innovation. Your question, I think, is more about what's going on here in the United States. I think it's certainly disappointing and frustrating as a U.S. company to find ourselves where we are.

The SEC continues, in my judgment, to drag its feet. It just feels like there's a certain hypocrisy since the SEC is continuing to note that justice delayed is justice denied. But they're seeking delays all the time. What Ripple seeks is clarity, and a level playing field. The United States government and the regulators of the United States government should not be picking winners and picking losers.

There’s the view you have become much more combative, especially on Twitter.

The SEC declared war on Ripple. Are we being combative? I don't know. We're trying to defend ourselves. If you read their initial lawsuit, there's all kinds of allegations there that aren't actually grounded in fact. They've certainly contorted the facts into telling a story which doesn't represent reality.

I don't know if we're being combative. I think we're trying to get the truth. We're trying to get this resolved as expediently as we can. The SEC is dragging its feet. We got sued. You’d think that if they sued us, they'd have all the ducks in a row. And they're the ones dragging their feet. Of course I'm going to be combative.

There will likely be speculation that this move of buying back your shares is a step toward an IPO. Can you comment on that?

That is an astute observation. The United States does have the most liquid, the most vibrant, the largest capital market in the world. My hope and expectation is we'll get this case with the SEC behind us in 2022. Then we will evaluate where to go from there. I think ultimately the future for Ripple is that we will be a public company. But I don't think that's a question we're spending a lot of time on today, given where we are with the SEC lawsuit.

The crypto market has been falling, together with the broader market. Do you think we are entering another crypto winter?

I've been at Ripple for seven years. There have always been interesting cycles. We've certainly dealt with this before.

I view this as part of the journey not dissimilar to what we've already experienced. I'm incredibly optimistic about what the future holds for Ripple and for digital assets broadly, particularly in a market where global economies are printing more and more fiat currencies that devalue the currency that everyone is holding.

What is your biggest worry on the regulatory front?

I'd say I'm optimistic. Again, if you step back over the last five, six years, most major economies have leaned into crypto in a way that is supporting innovation that is good for businesses, good for consumers.

Now, the wheels of justice and the wheels of government change are slow. I think it's going to take time. But as is the case with a lot of new technologies, people try to paint it, as the chair of the SEC said, by saying the “Wild West.” No, it’s not. Here in the United States, the crypto industry is actually quite regulated, not by the SEC, but by the CFTC. So it's kind of like painting a picture of crisis and drama by saying the “Wild West,” but the facts don't bear that out.

There’s the view that most crypto companies want the SEC not to be involved or to have its role minimized in any kind of new regulatory framework. Is that your view?

When you see a regulator going above and beyond and really stretching the mandate that has been given to them by law, it’s overreach. It’s like a power grab.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories