Saylor Says SEC Should Shutdown Ripple For Offering XRP As An Unregistered Security

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MicroStrategy co-founder said XRP is an unregistered security.

Over the past two years, several cryptocurrency experts have commented on the lawsuit between Ripple and the Securities and Exchange Commission (SEC). While most crypto community members support the leading blockchain company, some crypto stakeholders, like Ethereum co-founder Vitalik Buterin, and Microstrategy CEO Saylor, have refused to throw their weight behind Ripple.

In a recent PBD podcast, MicroStrategy co-founder Michael Saylor, while commenting on the lawsuit dubbed “the cryptocurrency trial of the century,” said XRP is an unregistered security. 

According to Saylor, Ripple owns the majority of XRP coins in escrow and sells them to the general public. He added that Ripple does not disclose details about its XRP holdings because the company had not gone public.

“Ripple [XRP] is an unregistered security. It’s pretty obvious. The company owns a bunch of it, and they sell it to the general public, but they never took the company public. There are no disclosures,” Saylor said.  

Saylor: Both XRP and ETH Are Unregistered Securities

For Saylor, XRP is an unregistered security like Ethereum native cryptocurrency ether (ETH), as a few people control both digital assets. 

Regarding Saylor’s claim that both ETH and XRP are securities, PBD host Patrick Bet-David asked him to comment on why the SEC chose to target Ripple and not Ethereum.

“… I’m not a ripple guy, but if both of them are unregistered, why Target Ripple and not Target Ethereum???”

Saylor said the most suitable approach the SEC should take is to shut down both Ripple and Ethereum, adding that they are “unethical.” 

“I think the best thing for the world would be if the SEC pretty much shut down all of it. It’s all unethical,” Saylor was quoted as saying.

The former CEO of MicroStrategy, accused of tax evasion in August, said XRP and ETH are equity tokens Ripple and Ethereum used to get around going public. He noted that both companies committed securities fraud via their offerings in the United States.

Saylor referred to the Ethereum 2.0 staking contract as the definition of an investment contract. Per MicroStrategy co-founder, over $20B worth of ETH is locked in the staking contract by investors, and there is a tendency that these investors may not get their funds back.

Data from the crypto analytics platform Dune Analysis show that investors have sent 15,540,823 ETH ($19.58B) to ETH 2.0 staking contract.

“If a bank took $20B of your assets, froze the window, and said you can’t have your money back ever. Maybe in 2024, but we’re not sure. We may give you interest in it. We may take it all. We may slash it. That’s the definition of security, right? It’s an investment of money in a common enterprise, you know, relying upon the efforts of others with an expectation of profit,” he added.

Per Saylor, for a crypto asset to be a commodity, it does not have to rely on a company’s engineers or a CEO. 

“The fact is, Ripple got a company, and Ethereum’s got a company [named] the Ethereum Foundation. [These companies] have engineers you’re waiting on them to write the code to give you your money back, and then you’re also waiting to find out what the monetary policy will be. They changed it half a dozen times in the last six years. It’s always changing to you,” he said.

Meanwhile, Saylor is a known Bitcoin maxi and has always described the top asset class as an ethical coin capable of reimbursing investors robbed by inflation.

Recall that the SEC charged Ripple in December 2020 for allegedly offering unregistered securities in the United States. The case has lingered for more than a year. The parties have filed their summary judgment motions, opposition, and replies, with XRP investors hoping for a victory in favor of the crypto asset.

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