Ripple CLO Stuart Alderoty has challenged the US Securities and Exchange Commission (SEC), accusing the agency of trying to manipulate legal proceedings that involve crypto companies. In a recent X post, the Ripple executive highlighted that the term “crypto asset security” mentioned in an SEC filing has no legal basis.
Ripple Challenges Regulator’s Take on FTX
The Commission has gone up against FTX, the Bahamian-headquartered crypto exchange that imploded in 2022 following the misappropriation of customers’ deposits. The bankrupt exchange is trying to refund creditors impacted by its collapse two years ago. It plans to repay users up to $16.3 billion under a new restructuring plan that uses cash and stablecoins.
For context, stablecoins are crypto assets pegged 1:1 with a fiat currency, in this case, the US dollar. However, the US SEC is against this move as it insists that it maintains the right to “challenge transactions involving crypto assets.” The agency tried to question the legality of stablecoins under the present securities law. SEC noted that FTX’s portfolio includes “crypto asset security” which it now plans to monetize to repay creditors.
This categorization by the Commission forced the Ripple CLO to weigh in on the matter. He made it clear that such term could not be found on any statute. As such, he claimed it is a term fabricated by the SEC. Furthermore, Ripple CLO advised the agency against using the term while suggesting that it was out to deceive judges.
US SEC Crackdown on Crypto Firms
It is worth noting that three weeks has passed since Judge Analisa Torres demanded that Ripple pay a fine of $125 million in its legal case with the US SEC.
Beyond Ripple, FTX is the SEC’s new battle. Meanwhile, the act of cracking down on crypto exchanges is a major trend with the US SEC. Robinhood, Kraken, ConsenSys, Uniswap and Coinbase have been caught in the SEC’s crosshatch in the past.
Non-Fungible trading platform OpenSea received a Wells Notice from the Gary Gensler-led Commission last week in another crackdown move. The regulator believes the digital collectibles traded on the NFT marketplace are securities. Similarly, Uniswap also got a Wells Notice from the regulator months ago
Significantly, the crypto industry is hopeful that with the coming of a new government in November and hopefully the ousting of Gary Gensler, the crypto regulatory landscape will improve.
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