The SEC took action against Ripple’s Brad Garlinghouse and Chris Larsen in December 2020 as commission filed a lawsuit claiming they were selling XRP tokens as a security to retail investors. In July of this year, a judge ruled that it was not a security. After just under 3 long hard fought years for Garlinghouse and Larsen, the SEC decided to not continue with their filing. The SEC notified the court in an Oct. 19 filing in the U.S. District Court for the Southern District of New York that the parties engaged in its lawsuit against Ripple "have stipulated to the dismissal with prejudice," implying that there was no need to schedule an imminent trial. Though, the filing made no mention of the SEC withdrawing its legal complaint against Ripple.
“Chris and I [...] were targeted by the SEC in a ruthless attempt to personally ruin us and the company so many have worked hard to build for over a decade,” Garlinghouse expressed, Oct 19 on X.
The SEC are also in different lawsuits against major crypto companies with the likes of Sam Bankman-Fried of FTX and Celsius CEO Alex Mashinsky, and also filed civil lawsuits with Binance and Coinbase. Is the SEC really focused on protecting investors? Or may lawsuits revolving around investors' protection be disheartening to newcomers?
Now this is a tricky question, we don’t know exactly what could be happening behind the scenes at the SEC and its lawsuits with these crypto giants. They could very well know something that we don’t. But, we can explore what this means for the crypto community as a whole. The SEC’s job according to their X bio is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” This is important as legal regulators who enforce rules to protect their investors are key when it comes to the inevitable financial freedom we all strive to reach, a grave opposite example of this is the infamous fall of FTX and loss of over $3 billion dollars of users funds.
The SEC challenging these giants in the space may be worrisome to users like you and I. As it implies there may be something fishy going on so it creates fear, uncertainty, and doubt within the space. This is why a lot of investors have their portfolios spread out in other exchanges. So if one goes down; not all of their capital or savings fly out the window. Investors, traders, and enthusiasts we often wonder if the exchanges, wallets, or services we’re using don’t misuse, lose, or rug our funds. Unlike some banks, there is no reimbursements when your funds are lost, whether that be you clicking on a phishing link, an exchange you trade on come crumbling down to the floor, or your wallet being compromised. And for all these reasons, the U.S Securities and Exchange commissions are prevalent.
Fortunately, the SEC’s investigations assure us that there is action being taken. But we are responsible for our own funds, for the most part. With exchanges, firms, and most-likely also government entities wanting to maximize profit. It puts users in a sticky situation. Regardless of if the SEC’s actions are justified, or if Binance is a sufficient exchange, the end result is that we h
ave to take care of ourselves, and be wary of what we do and don’t do when it comes to our investments.