Impossible Finance — The Sun Always Shines in Cryptoland

Martin C. W. Walker
4 min readFeb 13, 2022


Cryptocurrency firm Ripple Labs has been sued by the SEC and a major investor but it has had no impact on it’s behavior.

At the end of 2020, the SEC brought an action against Ripple Labs and two senior executives for an unregistered, ongoing digital asset securities offering. To quote the SEC Complaint[i]

Defendants sold over 14.6 billion units of a digital asset security called “XRP,” in return for cash or other consideration worth over $1.38 billion U.S. Dollars (“USD”), to fund Ripple’s operations and enrich Larsen and Garlinghouse. Defendants undertook this distribution without registering their offers and sales of XRP with the SEC as required by the federal securities laws, and no exemption from this requirement applied.

The SEC documentation also accuses CEO Brad Garlinghouse and executive chairman Chris Larsen of selling over $600m of their personal holdings of XRP. The case has yet to come to court because of a protracted document discovery process. Ripple has made multiple requests for internal SEC documents and communications relating to the case even though it is Ripple being sued. One of the most noteworthy delays was caused by a request shortly before the end of the document discover process for “29,947 RFAs (requests for admission), set forth in 5,097 pages, which refer to more than 1,500 separate documents.”[ii] According to the SEC, Ripple claimed the request were “neither difficult to answer, nor burdensome”

Some might question why Ripple would avoid getting to court, sooner rather than later, in order to settle the legal status of it’s sales of the XRP once and for all. After all, Ripple has called many times for regulatory clarity, if not more regulation of the cryptocurrency industry. “The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.” As Brad Garlinghouse stated in 2018.[iii] Surely it can not be good for Ripple’s payment’s business to have an SEC case looming over the business for over a year? However, as the SEC Complaint made clear Ripple makes most of its revenues from sales of cryptocurrency rather than payments software. In fact, as Garlinghouse admitted to the Financial Times, Ripple would be loss making without cryptocurrency sales.[iv]

A firm being sued for illegal issuance of securities might be tempted to pause sales and have a moment of reflection but not Ripple. Looking at the quarterly sales reports issued by Ripple since the SEC action began a clear picture emerges of accelerated crypto sales. Ripple Labs has sold $1.517 Billion worth of XRP[v], more than during the previous history of the company. That does not include any personal sales by Garlinghouse and Larsen. Given the SEC action may result in a ban on future sales and restitution to purchasers of XRP, it’s probably a case of “Now or Never.”

Another interesting twist is that CEO Garlinghouse announced via Twitter last week that Ripple Labs have bought out its Series C investors[vii]. Something they could easily afford to do given its recent XRP sales.

The Series C round in December 2019 raised $200m from New York investment company Tetragon, Japan’s SBI Holdings and Virginia-based venture capital firm Route 66 Ventures. According to Ripple this valued their company at $10 Billion dollars[i]. This was at a time before SEC action, when Ripple believed they could make even more money out of crypto through a good old-fashioned IPO.

When the SEC brought its case against Ripple in December 2020, Tetragon, which had provided the bulk of the Series C funding ($175m), sued Ripple Labs for the return of their investment[viii]. The case was quickly dismissed by the courts, not because they lacked a valid grievance but simply because at that point there was still no ruling regarding whether XRP was an illegally issued security.

In the normal world having to buy out your most recent investors at a premium would be seen as something of an embarrassment but this is Cryptoland. Garlinghouse’s tweet implies this action makes Ripple even more valuable with an increase in valuation from $10 Billion to $15 Billion. The Sun really does always shine in Cryptoland, at least in the minds of its leaders.

[i] Complaint: Ripple Labs, Inc. (“Ripple”), Bradley Garlinghouse (“Garlinghouse”), and Christian A. Larsen (“Larsen” and, with Ripple and Garlinghouse, “Defendants”) (







[viii] Ripple Investor Sues to Force Stock Redemption on SEC Claim — Bloomberg