Ripple General Counsel Stu Alderoty has criticized the United States Securities and Exchange Commission (SEC) for trying to “intimidate, bully and bankrupt” cryptocurrency innovation in the United States. in the name of expanding its own regulatory territory:
“By bringing enforcement actions – or threats of potential enforcement – the SEC seeks to intimidate, bulldoze and bankrupt cryptocurrency innovation in the United States, all in the name of impermissibly expanding its own jurisdictional boundaries.”
Alderoty shared his views on Monday amid an ongoing lawsuit between Ripple and the regulator, which he says is part of the “SEC’s assault on cryptocurrencies in the United States.” by treating each cryptocurrency as a security:
“Like a hammer that wants everything to be a nail, the SEC is keeping everything murky so they can argue that every cryptocurrency is a security.”
Ripple Labs has been embroiled in a legal battle with the SEC since December 2020, when the securities regulator filed a lawsuit alleging that Ripple executives had used Ripple tokens (XRP) to raise funds for the company starting in 2013.claiming that it was an unregistered value at the time.
Ripple defended itself, claiming that a 2018 speech by Robert Hinmanthen Director of Corporate Finance for the SEC, had categorized Ether (ETH) and Bitcoin (BTC), and that by association with XRP, as a non-security due to being “sufficiently decentralized.”
Ripple argued that the speech contradicted the SEC’s claims against Ripple and the XRP token, but the SEC countered the argument by claiming that the speech was the personal opinion of the director and not the official opinion of the regulator. This nuance has been one of the most crucial aspects of the dispute between Ripple and the SEC.
4 years since the (in)famous Hinman speech, and we’re nowhere closer on knowing how to classify digital assets in the US – keeping every crypto, including ETH, in regulatory limbo. I thought some thoughts for @Fortune why enough is enough, @SECGov. https://t.co/FB16cceaia
— Stuart Alderoty (@s_alderoty) June 13, 2022
4 years since Hinman’s infamous speech, and we still don’t know how to classify digital assets in the US, keeping all cryptocurrencies, including ETH, in regulatory limbo. I’ve written some thoughts for @Fortune on why enough is enough, @SECGov.
“Despite warnings that the speech was Hinman’s personal opinion and ‘not necessarily that of the Commission,’ the market took Hinman’s speech to heart,” Alderoty wrote.
“For Ripple, Hinman’s speech affirmed the conclusion that XRP – a cryptocurrency that exists on an open, permissionless, decentralized blockchain ledger – was a commodity and/or virtual currency. Certainly not a security.” , he added.
Alderoty said that the speech epitomized the SEC’s deliberate clouding of the regulatory waters for cryptocurrencies:
“Here in the United States, the Securities and Exchange Commission (SEC) has deliberately muddied the regulatory waters for cryptocurrencies. […] To unlock the true potential of cryptocurrencies, we need to clean up this regulatory mud.”
During an event held at the Washington Post on June 8, US Senator Kirsten Gillibrand agreed that most cryptocurrencies would be classified as securities under the Howey test, with the obvious exception of bitcoin and Ether.
The Chairman of the Commodity Futures Trading Commission (CTFC), Rostin Behnam took a slightly different view, stating that while there are “probably hundreds” of coins that replicate value coins, there are also plenty of commodity coins, like BTC and ETH, that would be regulated by his commission. .
The court battle between Ripple and the SEC is expected to set a precedent over the treatment of cryptocurrencies, particularly altcoins, under United States securities and commodities laws.
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