Gary Gensler: End the War on XRP
Gary Gensler: End the War on XRP
Over the past few months, evidence has publicly mounted which raises serious questions about the motivations behind the 11th hour charges brought by the U.S. Securities and Exchange Commission (SEC) against cryptocurrency innovator Ripple Labs and two executives in December 2020.
We’re asking Gary Gensler, recently confirmed as the new Chairman of the SEC, to take a close look at the SEC’s allegations against Ripple Labs, its cofounders, and the harm the SEC’s actions have already – and needlessly – caused to holders of the digital currency XRP.
Mr. Gensler, we also petition you to:
· Make a public commitment to sitting down with the holders of XRP and other digital assets to understand what it truly means to defend investors at the SEC. Your agency is trying to silence our voices in the Ripple lawsuit. Show us you understand what your job is all about.
· End the Ripple lawsuit and stop the SEC from making up cryptocurrency rules through lawsuits in place of writing these rules properly, with public input and partnership with the U.S. Congress.
· Join together with U.S. crypto and blockchain developers and digital asset holders to develop a clear regulatory framework for everyone, which make sense and protects innovation while fighting fraud and criminality. We are all ready to work with you.
· Request the SEC Inspector General conduct a thorough investigation of the matters that led to the last-minute lawsuit against Ripple, filed on the last day in office by former SEC Chairman Jay Clayton. That investigation must look into the contacts and relationships – past and present – between former Chairman Clayton and former SEC Director of Corporate Finance William Hinman in the United States, China and other countries, which had direct or indirect interest in the policy statements and official opinions they both issued during their tenure at the SEC on cryptocurrencies and other assets they sought to regulate.
Why This is So Important
Two of President Trump’s top political appointees at the SEC were – and continue to be – closely linked to financial interests in bitcoin, ether and financial technology business in the People’s Republic of China. Any of these connections individually would raise a question of conflict, but taken together it reeks of something much more nefarious.
- Former SEC Chairman Jay Clayton and his SEC Director of Corporate Finance William Hinman, came to their SEC posts after earning huge fees working for the IPO of Chinese tech giant Alibaba, which operates the mobile payments platform Alipay. They also took over at the SEC just as China was launching its all-out strategy to successfully gain control of the hash rate of bitcoin.
- During his entire term at the SEC, Hinman received millions of dollars in payments from the law firm of Simpson Thacher, which sits on the Ethereum Enterprise Alliance. Hinman collected checks from the firm while it earned huge fees supporting the IPO of Chinese crypto-mining giant Canaan.
- While Clayton and Hinman were in office, they were asked if bitcoin and ether were securities. They said very clearly, on the record: no they are not securities so keep trading them. They both took money from companies with direct or clear indirect interest in those public statements.
Clayton spent four years of his tenure being asked in interviews, in public forums and in official communications to the SEC: is XRP a security? Over and over, his agency’s answer was the same: “we don’t know”. At least one crypto exchange asked Clayton’s agency pointblank years earlier whether XRP was a security, and when given no indication that it was, the exchange listed XRP on its trading platform. Billions of XRP tokens have been bought and sold throughout the world for seven years with no connection to Ripple, its executives or its software products. The decentralized XRP ecosystem flourished far beyond Ripple or its software products for banks for cross-border payments.
But on his final day in office, Clayton had his SEC file a massive lawsuit against Ripple, claiming it had sold XRP as an illegal unregistered security for seven years –yes, seven years -- and that every sale of XRP on the secondary markets had been an unregistered securities sale. Furthermore, the SEC alleged that Ripple and all holders of XRP should have known for the last seven years that XRP was a security when the SEC itself repeatedly said it didn’t know it until the day it filed the lawsuit in December 2020.
Gary Gensler must end this practice of making policy through lawsuits, sit down with XRP holders themselves and listen to their stories. We want clear rules for everyone, not another SEC chairman picking winners and losers in a regulatory vacuum. And we demand an investigation that fully clarifies whether the SEC was protecting someone else's interests instead of retail investors when the Ripple lawsuit was filed in December 2020.