- Mary Jo White, attorney for Ripple, expects a summary judgment in October or a prior settlement with the SEC.
- Gary Gensler may have a vested interest in resolving the case and the regulatory uncertainty for cryptocurrencies as soon as possible, according to White.
In an interview with Fortune, former SEC Chair Mary Jo White laid out her concerns about the SEC’s action against Ripple Labs. In doing so, she joins Joseph Grundfest and Joseph Hall, two former high-ranking SEC officials who have questioned the SEC’s “true motives” and actions. What makes White special, however, is that she is part of Ripple Labs’ high-profile legal team.
The fintech company had already hired her in June 2018, along with Andrew Ceresney, a former enforcement director at the SEC, to defend Ripple in a lawsuit filed by private investors over the alleged unregistered XRP sales. In the new interview, White now picked up on individual arguments from Ripple’s defense strategy, stating that the SEC made a mistake when it sued Ripple Labs for allegedly selling unregistered securities.
There’s no way to sugarcoat it. They’re dead wrong legally and factually.
White attacked the fact that the SEC filed the suit just one day before Christmas and the departure of former Chairman Jay Clayton. She said this was “telling” because the agency’s top people were about to leave and years of investigations, without a lawsuit, preceded it:
As a former U.S. attorney and SEC chair, you know that when it takes that long to figure out a case you probably shouldn’t be bringing it. It’s not something I would do walking out the door.
Furthermore, White also claims that the SEC’s narrative is “misleading” as XRP was not sold as a speculative asset to solely enrich its founders. In addition, she says, the SEC’s fight has resulted in the Howey test being used to impose something on cryptocurrencies as a regulatory framework that does not fit modern technology. According to White, the SEC is “trying to fit a round peg in a square hole.”
Like Hall and Grundfest, White accuses the SEC of failing to protect small investors with its action, and actually harming them. As a result of the action, she says, “$15 billion in market capitalization were lost.” And if nothing else, the classification of Ethereum as a non-security shows the inconsistent stance of the U.S. agency, she said.
Judgment in October or previous settlement
As Fortune also reports, White hinted that “while the outcome of the lawsuit is uncertain for now, […] resolution could come as early as October in the form of a summary judgment from a federal court”. In addition, Fortune goes on to cite White as also suggesting “that the two sides could reach a settlement before then—one that could lift the legal cloud over Ripple, while also providing broader guidance to the cryptocurrency industry.”
On that note, White let slip that Ripple Labs has some hope in new SEC Chairman Gary Gensler, who “is an authority on cryptocurrencies” and will likely have a personal interest in the case:
You have scarce resources [as chair], and you have to pick your spots. The crypto-landscape is a critical one, and there’s a crying need for clarity.