Ripple CEO is confident that it will not lose to XRP, but SEC will lose to Ethereum

Ripple CEO Brad Garlinghouse responded on the X platform to reports that the United States Securities and Exchange Commission (SEC) is seeking to classify Ethereum (ETH) as a security.
In an X article today, Garlinghouse stressed that the SEC has suffered significant losses while attempting to engage in legal battles with the crypto industry.
He added that the regulator is now engaged in a legal tussle with its sister agency, the U.S. Commodity Futures Trading Commission (CFTC), as it failed to win in its dispute with the industry.
Garlinghouse posed a rhetorical question, asking when the SEC will realize that it will lose the battle to classify ETH as a security as it did with XRP.
The Ripple CEO made the comment in response to comments made by Coinbase’s chief legal officer, Paul Grewal, on the matter. As Cointelegraph reported yesterday, Grewal expressed support for Ethereum and pointed out a number of facts that prove ETH is not a security.
SEC fails to classify XRP as a security
It is worth mentioning that the SEC’s attempt to classify XRP as a security failed. Recall that in 2020, the SEC attempted to bring XRP under its regulatory scope when it accused Ripple of offering unregistered tokens to U.S. investors.
Regulators held onto this theory for more than two years until July 2023, when U.S. District Judge Analisa Torres declared that XRP itself was not a security.
Judge Torres also said that most of the XRP-related transactions conducted by Ripple, including programmatic sales and other distributions, did not constitute investment contracts - a special type of security.
Instead, the SEC scored a major victory in a summary judgment, with the court ruling that Ripple violated the law by selling XRP through its agency. Penalties for violations will be addressed during the remediation phase of the case.
It is worth noting that the SEC will submit an open comment letter on remedial measures today, March 22. However, the document will remain confidential and will not be filed in the public archive until March 26.
SEC attempts to promote itself as primary crypto regulator
Meanwhile, the SEC has been working to bring the entire U.S. crypto industry under its regulatory purview, as its attempt to classify XRP as a security failed. To achieve this goal, the SEC has sued several exchanges, such as Binance and Coinbase, and has applied securities labels to various crypto assets, including SOL, MATIC, and ADA.
Its latest attempt to classify ETH as a security shocked crypto enthusiasts, given that senior officials at the commission had previously acknowledged that Ethereum was outside its regulatory scope.
Bill Hinman, former director of corporate finance, shared this sentiment in his infamous 2018 speech in which he stated that ETH is not a security.
By its admission, the CFTC has been operating under the concept that Ethereum and Bitcoin are commodities. As a result, futures contracts for ETH have been listed on CFTC-registered exchanges, including the Chicago Mercantile Exchange (CME).
Hopes of Ethereum ETF Approval Diminished
If the SEC succeeds in classifying ETH as a security, it would reduce the chances of an upcoming spot-based Ethereum ETF.
Crypto enthusiasts have been optimistic that the SEC will be able to approve an Ethereum ETF this year, just as it approved a Bitcoin ETF in January.
Top experts expect approval to come by May 2024. However, investors’ hopes of seeing an Ethereum spot ETF launched in May are fading as the SEC brings ETH under its regulatory purview.
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