Ripple CEO Brad Garlinghouse counters SEC allegations and emphasizes: There is no Ethereum decentralization test for XRP

Ripple CEO Brad Garlinghouse counters SEC allegations and emphasizes: There is no Ethereum decentralization test for XRP

Ripple's Brad Garlinghouse responds to SEC's Ethereum testing claims

Ripple CEO Brad Garlinghouse has responded to a statement made by Fox Business panelist and journalist Charles Gasparino. Gasparino claimed that the US Securities and Exchange Commission (SEC) believes that XRP passes the so-called “decentralized Ethereum test.” Garlinghouse disputed this claim, stating: "There is no Ethereum decentralization test in the SEC. This is fiction."

Gasparino had quoted Garlinghouse and announced the end of the legal dispute between the SEC and Ripple Labs. In December 2020, the SEC filed a lawsuit against Ripple, alleging that the company violated U.S. securities laws by selling $1.3 billion worth of XRP without registering the assets as collateral. The agency argued that Ripple executives ignored previous warnings and failed to provide investors with necessary information.

Ethereum or Howey test?

The SEC is basing its case against XRP on the Howey test, a legal standard derived from a 1946 Supreme Court ruling in SEC v. Howey. This test defines a security as an investment in which the expected profits result primarily from the efforts of third parties. The SEC claims that XRP met these criteria at the time of its public offering to both investors and institutions, despite the agency previously ruling that Ethereum does not constitute a security.

William Hinman, former director of the SEC's Division of Corporate Finance, said that Ether does not meet the criteria of a security under the Howey test. This view was called the “Ethereum test.” The idea behind this is that in a decentralized crypto project, there is no clear “issuer,” meaning one party has no access to inside information or an unfair information advantage over other users.

Emails released in 2023 related to this discussion showed that the SEC's position on Ethereum was ambiguous. A June 12, 2018 email from former SEC Director of Trading and Markets Brett Redfearn raised concerns about Ethereum's security status clarification. Redfearn wrote: "As written, the language remains vague about whether ETH is a security. If you want to make a positive statement that it is not a security, the language could be clearer."

An SEC official later explained in an email that the agency “has no need to regulate Ether,” which was suggested in 2018. Ripple published these documents as part of its legal defense.

Current XRP price trends according to SEC news

XRP market movements show an optimistic development. The XRP community reports a 13.2% increase in the last 24 hours, with a price of just over $2.5 according to Coingecko data. A crypto analyst known as “Steph” on

Another market observer noted that XRP has formed a higher high sequence, signaling the potential for a sustained bullish market trend. Price predictions suggest that XRP could reach as high as $2.79-$2.92 before further consolidation occurs.

Conclusion

The legal and regulatory developments surrounding Ripple and XRP remain complex and multi-layered. The discussion about the status of XRP compared to Ethereum and the possible impact on the crypto market continues to be closely watched by analysts and investors.