On a rainy Friday night in September, a crowd of thousands filed into Hammerstein Ballroom, the legendary New York concert venue. It's a place that has hosted the Grateful Dead, Jane's Addiction and everyone from David Bowie to Taylor Swift.
But the crowd wasn't here for Taylor Swift. They were here for something far more important. They came for "The Proper Party."
This profile is part of CoinDesk's Most Influential 2023. For the full list, click here.
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The party's raison d'être? Months earlier, the CEO of Ripple, Brad Garlinghouse, had promised that if they emerged victorious from the SEC's lawsuit, he would throw a "proper party" to honor and thank the XRP community.
(I had profiled the XRP community, aka "XRP Army" earlier this year. My TLDR takeaway: For years the XRP Army had been reviled by much of the crypto space, but in many ways they had a point and even deserve some overdue respect.)
Garlinghouse had made this promise back in May. He predicted he would be on the right side of the law and the right side of history. And sure enough, on July 13, 2023, U.S. District Judge Analisa Torres ruled that Ripple had not violated securities laws when selling XRP to retail investors. The XRP Army rejoiced. The price of XRP (briefly) doubled. While lawyers continue to debate the exact implications of the ruling, it was widely seen as at least a partial vindication for Ripple, XRP, Garlinghouse, and perhaps the entire crypto space – more on that in a bit.
So Garlinghouse delivered The Proper Party. (The event's website literally called it "The Proper Party.") And on the crowded dance floor in Hammerstein, many in the XRP Army – who had flown in from across the nation – wore XRP T-shirts, XRP baseball caps, and even XRP socks that said, "XRP is not a security, 7.13.23."
Then Garlinghouse took the stage. The crowd roared. He said some thank-yous and began to share a personal story. "It's right before Christmas, and the goddamn SEC is suing me," Garlinghouse said into the mic, referring to the SEC's sudden announcement on December 22, 2020, that it had filed suits against Garlinghouse and Ripple co-founder Chris Larsen. The crowd booed at the mention of the SEC. Someone shouted, "F#ck the SEC!"
"I'm going to be honest, it was kind of a dark time," he told the crowd.
From SEC's Allegations to Ripple's Resurgence
Garlinghouse, who is 52 and originally from Topeka, Kansas, was surprised by the personal lawsuit. He felt betrayed. "I had cooperated fully," he told me in a recent phone interview. "Years before that, I had gone in and met with the Chair [former SEC Chairman Jay Clayton], and I didn't bring lawyers, because why would I? We were just sharing what we were doing. Like, 'Here's how we're using our technology.'" He felt that Ripple was acting in good faith, but later came to believe that "you don't always have a good-faith actor on the other side."
Over the next two-and-a-half years, according to Garlinghouse, Ripple was forced to spend roughly $150 million to defend itself. This slowed growth in the XRP ecosystem. And the SEC's actions almost certainly suppressed the price of the XRP token – which was booted from Coinbase and other exchanges – ironically harming the very XRP holders that the SEC was nominally trying to "protect." (For my feature on the XRP Army, I spoke with one XRP ride-or-die investor, for example, who had gone from being a crypto millionaire to working at a Lowe's hardware shop, but he still had faith that the price of XRP would recover.)
Meet the artist who created the image of Brad Garlinghouse, La Vaun.
So why, ultimately, did the SEC sue Ripple and Garlinghouse? I asked him point-blank. "Why do you think they sued you? What was the motivation?"
A long pause.
The pause was so long, I worried the phone had cut out.
In this lengthy pause, I thought of the many allegations by the XRP Army, which claims that key figures in the SEC had links to the Ethereum Foundation, so they threw the book at Ripple as a form of regulatory capture. The theory is called "ETHGate." (I gave a primer here.) Would Garlinghouse go there?
At last, he acknowledged the lengthy pause and finally said, "I don't know." He added, "I do believe that one day we will know," and that he "found it pretty incredulous that they would bring this case against me and Chris individually."
Since the December 2020 lawsuit – or "The Grinch that Stole Christmas," as Garlinghouse has called the SEC – it was a bruising two years for Ripple and XRP. But they had quietly, almost stealthily, been building and innovating and creating partnerships. Ripple launched a central bank digital currency (CBDC) platform and announced relationships with the Hong Kong Monetary Authority, Taiwan's Fubon Bank, the National Bank of Georgia, the Dubai Financial Services Authority and more. To the outsiders it looked like XRP was a zombie project; the insiders sensed that XRP was poised, quite literally, to take over the world's central banking infrastructure.
There's still plenty of work to be done before world domination, but by any measure, Garlinghouse can point to 2023 as a triumph. This is why he's an easy choice for this year's CoinDesk's "Most Influential" list.
It's likely that the crypto industry as a whole – long suspect of Ripple – now benefits from its legal victory. If XRP is not a security (at least when sold to retail buyers), perhaps that's precedent for thousands of other projects that remain in a state of legal limbo.
And perhaps the SEC will think twice about future lawsuits. "Had Ripple not won this case, and had the allegations against me and Chris not been dismissed, that emboldens the SEC to be even more aggressive for more projects," said Garlinghouse. "We drove a freight train through Gary Gensler's core arguments."
Garlinghouse knows that his 2023 comeback didn't happen in a vacuum. He had help. He had a community. He even had an Army.
The XRP Army's role in shaping Ripple's battle
Back in the Hammerstein Ballroom, onstage, he had just told the crowd that December of 2020 was a dark time for him.
Then he added a crucial coda.
"It was kind of a dark time … and out of nowhere comes a ray of sunshine," he told the crowd.
"And that sunshine is named John Deaton."
Again, the crowd roared. Garlinghouse pointed to a tall, bald, muscular, goateed lawyer, John Deaton, who in many ways embodies the heart and soul and brains of the XRP Army.
Deaton raised a fist in solidarity. Pumped the fist. The crowd cheered like he's a rock star, and to them he is. It was Deaton (with the help of XRP champions like Brad Kimes and "Digital Asset Investor") who rallied the XRP community to petition the judge that, actually, they were buying XRP (not Ripple) and had never even heard of Ripple, thus (they argue) weakening the SEC's argument. We'll never know to what extent this factored in Judge Torres' decision, but it's possible that the XRP community saved the day.
So you could make the case that this 2023 Most Influential award should be given not just to Garlinghouse, but also the entire XRP Army.
Garlinghouse seems to think so. "To be able to say, unequivocally, that XRP is not a security is just epic," he told the Hammerstein crowd. Again they howled in delight. Some shouted "Not a security!" This is almost certainly the first time in the Hammerstein Ballroom's 116-year history that people joyously shouted, "Not a security!"
"Together we have fought these battles," Garlinghouse told the crowd, "and together we won."
Then Garlinghouse gave up the stage to Lenny Kravitz, who performed a show because Hammerstein is a proper concert venue, and this was a Proper Party.
UPDATE 12/5/23: This article has been corrected to show that Garlinghouse is the CEO of Ripple, not a cofounder as originally stated.
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