Stuart Alderoty, the Chief Legal Officer for Ripple, has publicly criticized the SEC’s string of defeats in court against crypto businesses, questioning the effectiveness of the commission’s regulatory strategy and its impact on investor protection.
Ripple’s CLO Criticizes SEC’s Recent Legal Failures
Ripple’s Chief Legal Officer, Stuart Alderoty, has publicly voiced his concerns over the U.S. Securities and Exchange Commission’s (SEC) string of legal defeats in the cryptocurrency arena.
On social media, Alderoty referenced a specific judgment where a court ruled that the SEC had acted “arbitrarily and capriciously,” marking yet another setback for the regulator under the leadership of Gary Gensler.
The SEC’s aggressive litigation strategy has sparked debate in the crypto community, with high-profile cases against Ripple’s XRP, Binance, and Grayscale drawing particular attention. These cases, especially Grayscale’s lawsuit following the SEC’s refusal to approve its Spot Bitcoin ETF, put the SEC’s regulatory approach to digital assets under scrutiny.
Court Challenges SEC’s Overreach in Ripple Case and Rule Proposal
The SEC’s litigation against Ripple over XRP sales took a dramatic turn when Judge Analisa Torres ruled in favor of Ripple, stating that XRP’s programmatic sales did not breach federal securities regulations.
This legal battle, which began in December 2020, showcases the regulator’s challenging journey in establishing clear guidelines for cryptocurrency operations.
Moreover, the SEC’s ambition to expand disclosure requirements on stock repurchases was met with judicial rebuke. The Fifth Circuit Court of Appeals dismissed the SEC’s proposal, demanding the regulator to withdraw and reassess its approach.
The court criticized the SEC for its arbitrary decision-making and lack of thorough cost-benefit analysis, calling into question the SEC’s regulatory methods and demanding a more balanced consideration of new rules.
Ripple’s Q3 Report Highlights SEC Case Status
In Ripple’s latest quarterly report, the company outlined the current status of its ongoing legal tussle with the U.S. Securities and Exchange Commission (SEC).
The report also brought attention to a concerning rise in cryptocurrency-related fraudulent activities, noting losses of approximately $686 million due to scams, rug pulls, and protocol hacks in the third quarter alone.
Additionally, the report revealed that major U.S. cryptocurrency exchanges experienced a positive impact after choosing to list XRP in the wake of Judge Torres’s decision on programmatic sales, hinting at the market’s response to legal developments in the Ripple-SEC case.
The 2023 Q3 report indicates a robust increase in trading volume on the XRP ledger, with figures tripling compared to the previous quarter. The report also clarifies that despite ongoing legal proceedings, there have been no settlements in the dismissal of the SEC’s charges against Ripple executives Brad Garlinghouse and Chris Larsen.