Ripple CEO stands on Ethereum's side, saying ETH and XRP are not securities

Ripple CEO Brad Garlinghouse has expressed support for Ethereum after the U.S. Securities and Exchange Commission (SEC) stepped up its investigation into whether certain Ethereum (ETH) transactions qualify as securities.

Previously, MicroStrategy CEO Michael Saylor called ETH an unregistered security. Saylor reportedly said that ETH, XRP, Solana (SOL), Binance Coin (BNB), and Cardano (ADA) constitute unregistered securities. Saylor believes these assets will never become ETFs.

Garlinghouse, however, holds the opposite view. In a fiery conversation with Arrington Capital founder and partner Michael Arrington at the XRP Las Vegas 2024 event, Garlinghouse stressed that the SEC had it “all wrong” in its securities examination related to the two assets.

Ripple’s CEO has blasted SEC Chairman Gary Gensler, calling him an “unethical individual.” Eleanor Terret, a reporter for Fox Business, retweeted Garlinghouse's comments in an article today.

This is not the first time that the Ripple CEO has expressed support for ETH. In March, the Ripple executive asserted that the SEC would fail in its quest to characterize ETH as a security, just as it failed in its case against XRP.

For the uninitiated, both XRP and ETH are under regulatory scrutiny from the SEC. In 2020, the SEC classified XRP as a security in its lawsuit against Ripple.

However, the SEC faced a major blowback last year when a U.S. federal judge declared that XRP was not a security. The judge also ruled that Ripple violated the law when it offered and sold the cryptocurrency to institutional clients.

Despite this, the SEC did not explicitly designate Ethereum as a security. The regulator is simply investigating whether certain transactions involving ETH constitute investment contracts, a special type of security.

In response to the SEC’s scrutiny, Consensys Inc., a prominent software development company founded by ethereum co-founder Joseph Lubin, sued the regulator in a Texas court, alleging it exceeded its regulatory authority.

Consensys argues that the SEC is regulating Ethereum as a security despite the asset’s lack of security characteristics. The company further strengthened its argument by citing a previous statement from the SEC confirming that ETH is not a security and does not fall under the SEC’s regulatory purview.

Ethereum’s designation as a non-security was issued by William Hinman, former director of the SEC’s Division of Corporation Finance.

Meanwhile, the focus is on how the SEC’s ongoing review will impact the agency’s potential to approve an Ethereum spot exchange-traded fund (ETF) this month.

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