Ripple is the "devil"? The CEO defends his legality as the company grows


Ripple's role in streamlining international transactions and the popularity of its XRP tokens has increased the value of the company, but has also attracted critics who claim that Ripple is playing illegally on the market.

Ripple's CEO, Brad Garlinghouse, attempted to create a distance between Ripple and its XRP tokens, as well as explaining the company's collaboration with the banks, another issue that drew the wrath of the cryptocurrency communities, some of which referred to Garlinghouse and Ripple as "the devil".

Ripple is facing a collective action claiming that he is creating crypto coins "from scratch" and then selling them to the public in violation of California and US laws against the sale of non-registered securities to retail investors.

"XRP and Ripple are different.The purchase of XRP does not give you the rights to the company's Ripple," Garlinghouse said during the TechCrunch movie "Disrupt San Francisco".

  Brad Garlinghouse, managing director of Ripple Labs Inc.

Brad Garlinghouse, managing director of Ripple Labs Inc., speaks during the TechCrunch Disrupt 2018 in San Francisco.

Bloomberg News

The SEC said that companies that collect money by selling digital assets must adhere to securities laws. But the SEC did not make a definitive call in the case of Ripple and XRP.

The XRP is not a security since there are more "air gaps" between XRP and Ripple that separate the finances of the two entities, said Garlinghouse.

"If Ripple were to shut down tomorrow, XRP would continue to develop, so if XRP is a security, then what is a security of? XRP is not a security. it will become clear on our side, "said Garlinghouse.

Michael Arrington, partner of XRP Capital, whose portfolio includes Ripple and other blockchain companies, said angrily and sometimes prophetically that the SEC's focus is part of a general misappropriation of regulation, which – together to the immigration policies of Trump – would leave the Silicon Valley and the rest of the US technological development are at a disadvantage.

"[Most blockchain] investments are in Europe and Asia, where there is enough legal certainty for companies to feel safe to start blockchain companies," Arrington said. "In the United States there is so much uncertainty: the SEC must act together."

Jina Choi, the director of the SEC regional office in San Francisco, spoke at the TechCrunch event about half an hour after Arrington and Garlinghouse. Choi has not addressed any specific case, although he said the SEC has stepped up control of ICOs.

"I am reluctant to say that there is a standard, but back to what is an investment contract and that it is a security," Choi said.

Garlinghouse also tackled Ripple's success in enhancing cross-border transactions. Business partners do not use cryptocurrency, but they use Ripple's rails to remove correspondent banks and other third parties to take time and costs from international payments.

The process has been an advantage for online markets that sell goods across borders, since the blockchain takes friction from currency conversion.

Ripple was initially considered a rival of traditional banks, but has since collaborated with banks globally. Ripple has also begun to process international payrolls between the UAE and Singapore. Critics argue that this is contrary to the blockchain philosophy of being a decentralized alternative to central financial institutions such as banks.

"There are people who say that Ripple is the devil, because we are collaborating with" man "," said Garlinghouse. "Ripple is contrarian: if you want to revolutionize payments and transactions, it will not happen if everyone will give up the infrastructure and move on to something new."

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