When the Securities and Exchange Commission filed a lawsuit in the waning days of the Trump administration against cryptocurrency company Ripple in December, the broader crypto-industry reacted with surprise and alarm. It also led Ripple to deploy some high-profile advocates to defend it in public—including former SEC chair Mary Jo White.

In an interview with Fortune, White claimed the agency she once led made a blunder in suing Ripple for the alleged sale of unlicensed securities. The sale in question relates to the digital currency XRP, which was created by Ripple in 2013 and which today trades broadly in markets around the world.

“There’s no way to sugarcoat it. They’re dead wrong legally and factually,” White said.

 

White’s opinion should be taken with a grain of salt, given her current role as Ripple’s attorney. Nonetheless, White’s observations are worth noting given her stature. As one of the country’s top securities lawyers and a former U.S. attorney for the powerful Southern District of New York, White has firsthand insight into the politics and processes that inform decision-making at agencies like the SEC, which she led for nearly four years during Barack Obama’s second presidential term.

According to White, the fact that the SEC filed the complaint against Ripple in late December is telling. This was a time when most of the top people at the agency, including former chair Jay Clayton, were on cusp of departing and after the SEC had spent years investigating Ripple.

 

“As a former U.S. attorney and SEC chair, you know that when it takes that long to figure out a case you probably shouldn’t be bringing it. It’s not something I would do walking out the door,” she said.

While the timing of the lawsuit has raised eyebrows, the complaint itself contains damning allegations. Specifically, the SEC claims senior executives, including cofounder Chris Larsen and current CEO Brad Garlinghouse, have made millions for themselves selling XRP—even as Ripple failed to find a practical use for the digital currency. In the agency’s view, Ripple’s main goal has been to induce people to buy XRP as a speculative investment.

To make its case, the SEC points to a 1946 Supreme Court ruling that sets out the definition of an investment contract—a definition that, over the years, has encompassed a wide variety of ventures such as “orange groves, animal breeding programs, railroads, mobile phones, and enterprises that exist only on the Internet.”

Despite the novelty of digital currency, Ripple’s sale of XRP is just another example of a company flogging a speculative investment, according to the SEC. And under long-standing securities laws, such a company is obliged to provide disclosures with the agency to help investors understand what they’re buying.

White claims that this narrative is misleading and that the SEC’s struggle to develop a regulatory framework for crypto has led it to try to “fit a round peg in a square hole.” She also argues that the agency’s lawsuit is arbitrary, especially given that the SEC recently declared that Ethereum—another popular cryptocurrency developed after XRP—is not a security.

 

According to White, “$15 billion in market cap was lost,” owing to the lawsuit, and she claimed this has primarily come at the expense of ordinary investors the SEC is charged with protecting.

While the outcome of the lawsuit is uncertain for now, White suggested a resolution could come as early as October in the form of a summary judgment from a federal court. She also hinted that the two sides could reach a settlement before then—one that could lift the legal cloud over Ripple, while also providing broader guidance to the cryptocurrency industry.

White notes that Jay Clayton’s successor, incoming SEC chair Gary Gensler, is an authority on cryptocurrency and is likely to take a personal interest in the case.

“You have scarce resources [as chair], and you have to pick your spots. The crypto-landscape is a critical one, and there’s a crying need for clarity,” she said.

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