The US Securities and Exchange Commission (SEC) has been engaged in a legal battle with Ripple Labs, and there have been speculations that the agency could also target Ripple’s founders, Brad Garlinghouse and Chris Larsen. However, legal expert Fred Rispoli believes that the SEC is unlikely to sue the founders for several reasons.
While the SEC accused Ripple Labs of selling unregistered securities in 2020 and highlighted Garlinghouse and Larsen’s involvement, it never specifically targeted them with legal action. Typically, when the SEC sues a company, it also brings actions against its top executives. For example, the agency recently sued cryptocurrency exchange Bittrex and its former CEO for operating an unregistered securities exchange. However, Rispoli suggests that the SEC only threatened a lawsuit against Garlinghouse and Larsen to pressure Ripple into a weak settlement position, with no intention of actually pursuing a trial against them.
Rispoli argues that the SEC would not want to risk its credibility being questioned in court, which could happen if former SEC Chair Jay Clayton and former SEC Director William Hinman are called as witnesses. This position may be influenced by the Himman documents, which highlight questionable practices and potential corruption within the agency. It is believed that Hinman may have been influenced by external forces when he stated that Ether was not a security.
Another reason Rispoli believes the SEC is unlikely to sue Garlinghouse and Larsen is because the agency has a weak case. He suggests that it will be challenging for the SEC to prove that the executives were reckless in terms of institutional sales, as they can raise a defense that these sales were programmatic and did not constitute an investment contract. Additionally, the SEC does not have sufficient evidence to differentiate between domestic and international sales, which weakens their case further.
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Rispoli also points out that the SEC recently reorganized most of its trial team, indicating that the agency may not have enough manpower to handle an additional lawsuit involving the founders of Ripple. This suggests that the SEC may be in a vulnerable position and lacking the resources to pursue legal action against Garlinghouse and Larsen.
The SEC had filed an interlocutory appeal following a ruling in favor of Ripple Labs by Judge Analisa Torres. However, Rispoli believes this move is a “Hail Mary” attempt by the SEC, as it had no bargaining chips left if the appeal had not been approved.
In summary, Fred Rispoli, a pro-XRP legal expert, believes that it is unlikely for the SEC to sue Ripple’s founders, Brad Garlinghouse and Chris Larsen. He suggests that the SEC only threatened legal action against them to pressure Ripple into a settlement and that the agency would not want to risk its credibility in court. Additionally, Rispoli argues that the SEC has a weak case and may lack the resources to pursue a lawsuit against the founders. With these factors in mind, it appears unlikely that the SEC will drag Garlinghouse and Larsen into their legal battle against Ripple.
