Ripple’s chief legal officer, Stuart Alderoty, has slammed the U.S. Securities and Exchange Commission, led by Gary Gensler, for continuing the Binance litigation on the verge of a leadership change.
Yesterday, the SEC filed an 81-page brief in the Binance holding lawsuit, accusing the exchange giant of offering its native token, BNB, and ten other assets, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Decentraland (MANA), Filecoin (FIL), Sandbox (SAND), Cosmos (ATOM), Algorand (ALGO), Axie Infinity (AXS), and COTI as investment contracts.
Alderoty Condemns SEC’s Action
In a recent tweet, Stuart Alderoty attacked the outgoing SEC chair, Gary Gensler, for relentlessly pursuing crypto litigations even though he would soon leave office.
Recall that Gensler announced his exit from office on January 20, 2025, the same day as Trump’s inauguration. His position will be occupied by former SEC commissioner, Paul Atkins, whose appointment was announced yesterday.
Alderoty noted that the new filing is just a recycling of the same failed arguments that include the “absurd and unsupported” notion that cryptocurrencies have no intrinsic value.
Instead of standing down and pausing crypto litigation with new leadership just weeks away, Gensler's SEC filed an 81-page brief in the Binance case yesterday, recycling the same failed arguments—including the absurd (and unsupported) claim that crypto has no inherent value.…
— Stuart Alderoty (@s_alderoty) December 5, 2024
Alderoty has always been an advocate for a clearer regulatory framework. He has confronted the SEC severally about creating updated, consistent, and clear regulations, and not relying on the outdated interpretation of the Howey Test.
The SEC, under Gensler, has been accused of enforcing an aggressive approach to the crypto sector, rather than creating frameworks that will allow the industry to thrive. This action has led to an uproar in the crypto community.
Crypto Community Reacts
Meanwhile, Alderoty’s post was met with reactions from the crypto community members. Particularly, pro-XRP attorney, John Deaton, the Republican candidate for the Massachusetts Senatorial race, referred the SEC to re-read the Howey Test, noting that an asset’s inherent value is not relevant in determining if it constitutes security.
“If that test be satisfied, it is IMMATERIAL whether the enterprise is speculative or nonspeculative, or whether there is a sale of property WITH OR WITHOUT INTRINSIC VALUE,” he wrote
Another user, Chintokkong, stressed that the SEC is confusing “issuers of a security” with “issuers of an asset.” He cited examples using Gold and Gold ETFs, emphasizing that while gold miners are the issuers of the asset gold, and financial entities are issuers of the Gold ETF, the asset itself is not a security.
Moreover, he stressed that there is no such thing as “digital asset security” and the SEC should stop confusing the public with the notion.
SEC’s Action Against Ripple
Ripple is one of the companies that have suffered litigations from the SEC as a result of unclear regulations. The agency filed a lawsuit against Ripple in December 2020, accusing the firm of offering XRP as unregistered security to investors.
While the case have dragged on for so long, it has reached several important points. The court ruled in July 2023, that XRP is not a security and that its programmatic sales to retail investors does not constitute security.
However, Ripple was found to have violated federal securities laws by offering XRP to institutional investors and was ordered to pay $125 million in civil penalties. This mixed outcome underscores the need for an updated regulatory framework that is particular to the digital assets industry.
Ultimately, the crypto industry anticipates an ease on stringent regulations with the coming of the new chairman, Paul Atkins next year.
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