Ripple CTO Sheds Light on SEC’s Decision to Exclude Co-Founder Jed McCaleb

• Ripple CTO David Schwartz clarifies Jed McCaleb’s exclusion from the SEC lawsuit against Ripple’s current executives.
• The SEC originally targeted Brad Garlinghouse and Chris Larsen, alleging $1.3 billion raised through unregistered XRP sales.
• The SEC is reviving the aiding and abetting claims against Garlinghouse and Larsen.

Ripple CTO David Schwartz addressed questions on why Ripple co-founder Jed McCaleb was excluded from the SEC’s lawsuit. In a post on X, crypto commentator “Digital Asset Investor” publicly questioned McCaleb’s exclusion from the case. The inquiry followed a post by Andrew De Vilbis, who shared McCaleb’s vision for Stellar, the blockchain project McCaleb co-founded after leaving Ripple.

Joining the conversation, Schwartz suggested that McCaleb’s departure from Ripple years earlier and his lack of ongoing involvement may have influenced the SEC’s decision. “Including him in the suit wouldn’t provide any of the leverage that the SEC was looking for,” he stated.

This implies that the agency may not have considered McCaleb’s inclusion critical to its case against Ripple’s current leadership.

SEC Revives Charges Against Ripple Executives

Notably, the SEC has targeted CEO Brad Garlinghouse and Executive Chairman Chris Larsen in the lawsuit. The agency initially filed charges in December 2020, alleging that the executives raised $1.3 billion beginning in 2013 through an unregistered securities offering of XRP.

The SEC accused them of aiding and abetting the company in violating federal securities laws. However, the SEC dropped charges against Garlinghouse and Larsen shortly after a court ruled in July 2023 that XRP is not a security.

In response to this development, Garlinghouse described the case as politically motivated, stating, “For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda.” Larsen echoed this sentiment, calling their legal victory a personal vindication, even as the broader case against Ripple continues.

However, on October 17, the SEC filed an appeal in the Ripple case, contesting the verdict that programmatic sales of XRP did not meet the legal criteria for an investment contract. In the filing, the SEC also revived aiding and abetting claims against Garlinghouse and Larsen.

Legal expert Jeremy Hogan remarked that this legal move appears aimed at increasing potential penalties, describing it as a calculated attempt to pressure Ripple’s executives.