Ripple Labs has been battling the United States Securities and Exchange Commission (SEC) in a nasty court battle for nearly a year now. And yet, there is still no respite in sight. When the blockchain company was first accused by the watchdog of breaking securities laws, many in the crypto community showed their support for Ripple.
Not everyone though.
Messari CEO Ryan Selkis believes that while Ripple is not guilty of the above, he is in fact guilty of fraud and should be charged accordingly.
In a Twitter thread attacking the SEC leadership, the executive noted,
“They misled XRP holders about selling insider tokens, selectively leaked data, and exaggerated partnerships as adding value to the underlying currency.”
Selkis also argued that had SEC chief Gary Gensler backed Commissioner Peirce’s safe harbor proposal, Ripple’s alleged fraudulent activities could have been “fixed”. Instead of,
“The SEC fights technical securities violations, while ignoring Safe Harbor, which would prevent fraud.”
SEC Commissioner Hester Peirce, better known as “crypto-mom,” released multiple editions of the proposal during the year. He introduced a three-year grace period to allow projects to launch successfully before they had to worry about federal securities laws and what such a project should look like.
Although she has received many positive comments on this, she has yet to receive the approval of the other Commissioners.
Selkis also took several examples of how Ripple’s business was conducted to prove how the Safe Harbor proposal could have benefited the company.
First, Peirce had proposed that sufficient information be provided for third parties to verify the token’s transaction history. Selkis believes that would have “guaranteed Ripple to support a freely available and scalable block explorer”.
The next point related to documenting all token transaction information could have accounted for all of Ripple’s historical sales, as well as “research and release to business partners,” according to Selkis.
He also argued that the proposal would have allowed tracking of the sale of XRP holdings by key Ripple executives, as well as its affiliate foundation.
He concluded that the proposal would have given Ripple three years to define a “distribution and decentralization strategy”. He added,
“The company would have either cleaned up its ongoing reports or faced enforcement action for fraud. It would have been a strategy for growth and innovation. Executives would have improved their relationships, or faced charges of fraud, not mere securities breaches. “
As expected, the reactions were quick, with John Deaton’s tweet,
Testifying before Congress, Gensler declined to answer whether or not he had read @HesterPeirce‘s Safe Harbor, which means it didn’t. The simple fact that he didn’t even take the short time to read it Safe Harbor tells you everything you need to know about his intent.
– John E Deaton (@ JohnEDeaton1) November 14, 2021
Selkis criticized Ripple for a long time long before the company was sued by the SEC. While Messari previously called XRP “toxic waste,” its founder had previously published a report accusing Ripple of using its RippleWorks charitable foundation as a tax shelter.