For almost a year now, Ripple Labs has been battling an ugly court case against the US Securities and Exchange Commission. However, there is still no chance to breathe. When regulators first accused the blockchain company of violating securities laws, many in the crypto community reached out to support Ripple but not everyone.
Ripple Did Not Violate Securities Laws, But They Did Commit Fraud
Posting his opinion via Twitter on November 14, Messari CEO Ryan Selkis believes that while Ripple did not violate securities laws, they did in fact commit fraud and should be charged accordingly. The executive attacked the SEC leadership and pointed out that they have misled XRP holders regarding internal token sales, selectively disclosed data and hyped the valued partnership as the base currency.
Selkis also argued that if SEC chairman Gary Gensler had backed Commissioner Peirce’s Safe Harbor proposal, Ripple’s alleged fraud could have been “fixed” instead of escalating.
SEC Commissioner Hester Peirce, better known as “Crypto-Mom”, released several versions of the proposal over the past year. It introduced a three-year grace period that made it possible to successfully launch projects before they had to worry about federal securities laws and what such projects should look like.
Although it has received a lot of positive feedback, it has not yet received approval from other commissioners.
Benefit of Crypto-Mom Safe Harbor proposal
The CEO also cited several examples from Ripple’s business practices to show how the Safe Harbor proposal can benefit the company.
First, Peirce suggested that sufficient information should be made available to third parties to allow them to verify the transaction history of tokens. Selkis believes this will ensure that Ripple supports a freely available and forkable block explorer.
According to Selkis, the next point regarding all information documents for token transactions will be able to take into account all historical Ripple sales as well as inquiries and discounts to business partners.
He also argued that the proposal would allow sales of XRP assets to be tracked by Ripple’s senior managers and its affiliated foundations.
Selkis concluded that the proposal gives Ripple three years to develop a “distribution and decentralization strategy”. He added that the company will either purge its ongoing reports or face fraudulent enforcement actions. This was originally a strategy to encourage growth and innovation. Executives could have improved their reports or been exposed to fraud allegations, not just for securities breaches.
John Deaton quickly responded to Selkis tweet stating that when testifying before Congress, Gensler refused to respond if he’d read Hester Peirce’s safe haven, which means he didn’t. The fact that he didn’t even take a moment to read the safe haven tells you everything you need to know about his intentions.
Before the company was sued by the US Securities and Exchange Commission, Serkis had long criticized Ripple. Although Messari previously referred to XRP as “toxic waste,” its founder released a report accusing Ripple of using its charity foundation, RippleWorks, as a tax haven.
