SEC vs. Ripple: This May Be Key Reason Why Ether Was Given Free Pass

In a recent tweet, Fox Business’s Charles Gasparino claims that sources within the U.S. Securities and Exchange Commission told him that the reason why Ether is not deemed to be a commodity by the regulator is the built-out infrastructure of the blockchain that has been operational for years.

BREAKING (1/2): @SEC_Enforcement sources tell @FoxBusiness the logic of the agency’s case v @Ripple is that the company’s infrastructure is STILL being built out so XRP — the token which was used to finance the thing — is considered a security. @ethereum infrastructure is— Charles Gasparino (@CGasparino) September 15, 2021

Ripple, on the other hand, still relies on XRP in order to finance its business. Gasparino says that this is the reason why the SEC alleges that the cryptocurrency is actually an unregistered security.

In March 2020, Ripple CEO Brad Garlinghouse told the Financial Times that the company wouldn’t be profitable without selling the token.

According to the SEC’s complaint, Ripple stated in a 2013 promotional document that its business model was predicated on the success of XRP.

Expectedly, Gasparino’s explanation didn’t satisfy members of the XRP community, with many of them taking issue with the word “build-out.” Ethereum is currently in the process of transitioning to the proof-of-stake model.

Ripple, as well as the XRP community, are demanding answers about the SEC’s internal deliberations on digital assets.

As reported by U.Today, the deposition of William Hinman, the agency’s former top official who claimed that Ether wasn’t a security in the 2018 infamous speech, took place on July 27. During his testimony, Hinman revealed that he had actually warned Ripple about XRP and advised the company to halt its sales.

The SEC has distanced itself from Hinman’s speech, with Ether’s security status remaining in limbo. In August, SEC Chair Gary Gensler declined to comment on whether the cryptocurrency is an unregistered security.


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