In a fight for regulatory clarity, Ripple Chief Executive Officer (CLO) Stuart Alderoty has fired back at the United States Securities and Exchange Commission’s (SEC) Director Gurbir Grewal’s claims of non-compliance among crypto firms within the cryptocurrency industry.
Ripple CLO Slams US SEC’s Directors Remarks
During a two-day SEC Speaks event sponsored by the Practicing Law Institute held on Wednesday, Gurbir Grewal criticized the crypto industry highlighting the sector’s noncompliance over the years.
Grewal claims that the cryptocurrency sector has long struggled with non-compliance and has devised inventive strategies to elude the SEC’s jurisdiction. He also addressed allegations that the regulatory watchdog is picking winners and losers in the market and going beyond its authority in enforcement measures.
He stated:
Over the past decade, we have confronted significant non-compliance and many, many creative attempts by market participants to avoid our jurisdiction, with some claiming that we are making it up as we go or regulating by enforcement, and others arguing that we are recklessly exceeding our authorities.
Responding to the remarks, Ripple CLO Stuart Alderoty noted that Grewal contended that the unit tasked with enforcing crypto laws operates honorably, but he disregards the DebtBox penalties for egregious misuse of authority in certain cases. These include the Ripple Judge’s admonishment for not having shown faithful allegiance to the law and the arbitrary and capricious decision in the Grayscale lawsuit.
Alderoty further asserted that the Director quoted a single part from the Ripple verdict, but he failed to mention that the SEC lost the case or abandoned most of its claims. Specifically in the case where the Court rejected the agency’s allegation that XRP was by itself a security.
The CLO also addressed Gurbir’s statement regarding the Howey test. Gurbir attests that the SEC has been protecting cryptocurrency investors for years by applying Howey and its offspring clearly and consistently. “We have applied it to the alleged facts in dozens of orders, complaints, and briefs,” he added. However, Alderoty believes that the guidance adopted by the agency, arbitrarily adds and removes elements from the Howey test.
As a result, this has created greater confusion in the words of the Commission’s former General Counsel. Thus, Alderoty has called for a lucid amendment to the crypto landscape.
A Call For Clear Modification Toward The Crypto Sector
The SEC’s regulatory approach over the years has previously harmed both the agency and the industry. According to Alderoty, the Commission needs to get off its soapbox and face these truths if it is sincere about repairing the institutional harm triggered by this misguided war on crypto over time.
While Gurbir has taken a swing at crypto, SEC’s Commissioner Hester Peirce has expressed her disapproval of the Commission’s regulatory stance toward the sector, concentrating in particular on Staff Accounting Bulletin 121 (SAB 121).
Drawing attention to the SAB 121, Peirce highlighted that it does not safeguard investors. Rather, it keeps seasoned banks and broker-dealers out of the cryptocurrency custodian market, due to its capital implications.