Ripple CEO Brad Garlinghouse has expressed his frustration with the Securities and Exchange Commission (SEC) following the agency’s lawsuit against Cumberland for allegedly operating as an unregistered securities dealer. In a recent post, Garlinghouse highlighted comments made by SEC Commissioner Mark Uyeda, who criticized the agency’s regulatory approach to the crypto industry as a “disaster.”
During an interview on FOX Business, Uyeda stated that the SEC has been relying on enforcement actions to implement its crypto policies but has failed to provide clear guidance to the industry. He noted that there have been inconsistent rulings and a lack of clarity on what activities constitute securities offerings and how to comply with registration requirements.
Garlinghouse weighed in on the matter, pointing out that even insiders at the SEC are critical of the commission’s approach to crypto regulation. He emphasized the timing of Uyeda’s comments coinciding with the SEC’s charges against Cumberland, suggesting that the regulatory landscape needs to change.
The SEC’s lawsuit against Cumberland alleges that the company operated as an unregistered securities dealer and sold $2 billion worth of crypto assets through third-party exchanges since 2018. The SEC identified five cryptocurrencies handled by Cumberland, including Cardano (ADA), Algorand (ALGO), Solana (SOL), Polygon (MATIC), and Filecoin (FIL), as securities.
In response to the lawsuit, Cumberland criticized the SEC for its “enforcement-first approach,” which it believes stifles innovation and hinders legitimate businesses from operating in the digital asset space. The company highlighted bipartisan criticism of the SEC, with the House Financial Services Committee referring to the commission as a “rogue agency” for its lack of collaboration with Congress.
Despite efforts to comply with the SEC’s requirements, including acquiring a registered broker-dealer in 2019, Cumberland was restricted by the SEC to trade only Bitcoin (BTC) and Ethereum (ETH). The company affirmed its commitment to maintaining its business operations unchanged in light of the SEC’s legal action.
The SEC’s actions against Cumberland sparked reactions from industry stakeholders, with Justin Slaughter of Paradigm suggesting that SEC Chair Gary Gensler harbors a hidden agenda against the crypto industry. Slaughter claimed that Gensler privately aims to dismantle the crypto market to protect traditional financial institutions, expressing confidence in the SEC’s regulatory authority.
Garlinghouse echoed Slaughter’s sentiments with two loudspeaker emojis, signaling his agreement with the perspective shared by Paradigm’s executive. The ongoing debate surrounding the SEC’s regulatory stance on crypto continues to draw attention from industry participants, prompting calls for greater clarity and collaboration between regulators and market participants.