Ripple CEO slams US listing after Coinbase post-IPO mess
Ripple CEO Brad Garlinghouse, speaking at the World Economic Forum in Davos, Switzerland, denied rumors about pursuing an initial public offering (IPO) in the United States due to what he perceives as a “hostile” regulatory environment.
Garlinghouse highlighted the challenges faced by companies like Coinbase, which had its S-1 prospectus (a form filed with the SEC detailing a company’s business operations and financials before an IPO) approved, only to later face legal actions from the SEC. This situation, he noted, reflects the complexities and uncertainties crypto-related businesses face when interacting with U.S. securities regulators.
Ripple’s own ongoing lawsuit with the SEC, which began in 2020, has been a major factor in delaying its IPO plans. Garlinghouse confirmed that while Ripple had considered listing in jurisdictions with clearer regulatory frameworks, these plans are currently on hold. He added that Ripple does not urgently need to raise capital through an IPO, as the company has been cash flow positive for the past couple of years.
The Ripple CEO described the current SEC Chair, Gary Gensler, as a “political liability.” Garlinghouse indicated that a change in SEC leadership could be beneficial for the industry and the American public.
Despite these challenges, Garlinghouse doesn’t view a future IPO as merely an exit strategy for investors, but a milestone in Ripple’s journey.
The lawsuit between the SEC and Ripple, focusing on the classification of XRP as an unregistered security, was sent to trial in July by a federal district judge. This decision refused to grant a summary judgment, setting the stage for further legal proceedings.
Garlinghouse’s statements at Davos comes barely a week after Top of Form
theththe SEC revived its legal battle against Ripple Labs by filing a motion to compel the company to produce specific financial documents. The agency wants Ripple to hand over financial statements from 2022 to 2023, along with contracts related to ‘Institutional Sales’ post the filing of the complaint.
This request from the SEC is particularly focused on contracts that encompass information about institutional sales of XRP, following a July 2023 ruling. In this ruling, a judge determined that XRP only constituted a security when sold to institutional investors.
The lawsuit against Ripple alleges that the company, along with its CEO Brad Garlinghouse and executive chair Chris Larsen, engaged in raising funds through unregistered securities. In October 2023, the SEC said it plans to drop the case against Garlinghouse and Larsen but will continue legal proceedings against Ripple. The trial between Ripple and the SEC is set to start in April.
Ripple Labs said earlier this month it plans to repurchase $285 million worth of shares from its early investors and employees. This move, described as a tender offer, places the company’s valuation at $11.3 billion.