The US Securities and Exchange Commission (SEC) is being heavily criticised by Ripple Labs’ Chief Legal Officer (CLO) at the regulator’s repeated use of the phrase “crypto asset security.”
The Ripple Labs CLO argues it is a fabricated term with zero legal grounding.
The term 'crypto asset security' is nowhere to be found in any statute—it's a fabricated term with no legal basis. The SEC needs to stop trying to deceive judges by using it. pic.twitter.com/CyNbUbeoYM
— Stuart Alderoty (@s_alderoty) September 2, 2024
This latest spat comes after a recent filing from 30 August 2024 whereby the SEC warned it could challenge any plan by defunct crypto exchange FTX to use stablecoins in repaying creditors. The regulator noted that FTX’s portfolio has “crypto asset securities.”
Ripple’s CLO, Stuart Alderoty, believes that by regularly using the term, the SEC is attempting to deceive judges involved in its cases against crypto firms.
In his X post from Monday (2 September 2024), Alderoty said, “The term ‘crypto asset security’ is nowhere to be found in any statute, it’s a fabricated term with no legal basis.” He went on to say that the SEC needs to stop trying to deceive judges by using it.
Alderoty isn’t the first to take umbrage with the term. In an August update to the SEC’s ongoing legal battle with crypto exchange Kraken, the Federal Court for the Northern District of California also commented on the term. It said that the “crypto asset security” concept is “unclear at best and confusing at worst.”
the SEC is again reserving the right to claim dollar-backed stablecoins are “crypto asset securities,” despite dropping their enforcement against paxos and losing their MTD on BUSD against binance in july
this is the height of jurisdictional overreach
it’s quite absurd if you… pic.twitter.com/laT6vY5i6T
— Alex Thorn (@intangiblecoins) September 1, 2024
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Alderoty Also Fires Back At The Regulator’s Recent Wells Notice To OpenSea
Ripple Labs Chief Legal Officer has been on a warpath with the SEC recently. In another X post from August 29, Alderoty also took aim at the regulator’s Wells notice to NFT marketplace OpenSea. The notice claims the tokens being sold on the platform might be unregistered securities.
Alderoty made reference to a case from over 40 years ago regarding a physical art gallery. The agency made a ruling in that case after they decided the gallery didn’t need to register with the SEC, even if buyers were purchasing art with a view to it being an investment.
The gallery was concerned that collectors could buy the art as investments. In theory, the could then sell them after they increased in value at a future date. In this case, the SEC declined to proceed with enforcement actions. “In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC,” Alderoty said.
Fun fact: In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC. https://t.co/CtQJ3mlPkh pic.twitter.com/oR8EgGpXoo
— Stuart Alderoty (@s_alderoty) August 29, 2024
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
