Ripple General Counsel Wants Gensler To Be Investigated Alongside SBF

Ripple General Counsel Says SEC Chair Needs to Answer Questions About Meetings With SBF.

The FTX collapse has continued to be a major topic of discussion in cryptocurrency. Top crypto stakeholders are airing their views about the sudden collapse of the once-prominent cryptocurrency exchange.

Several reports have emerged indicating that Sam Bankman-Fried (SBF), the former CEO of FTX, met with SEC Chair Gary Gensler on numerous occasions to help the exchange with legal loopholes.

These reports have prompted debates in the crypto space, with Stuart Alderoty, Ripple’s General Counsel, giving his opinion on the matter. In a tweet today, Alderoty said investigations are in order.

“However, that investigation shouldn’t obscure the market havoc (and consumer harm) the SEC continues to create in the absence of regulatory clarity in the U.S.,” he said. 

Alderoty: Gensler Needs to Answer Some Questions

Alderoty raised questions that investigators must ask Gensler during interrogations over his meetings with SBF.

“Investigators should ask: Was Gary Gensler acting alone when meeting with SBF? Was this the last-gasp effort to finally manufacture that ever-elusive SEC registration the Chair has been after? Would SBF have ended up with even more consumer assets under his control?” Alderoty noted in a tweet. 

Investigators should ask: Was @GaryGensler acting alone when meeting with SBF? Was this a last gasp effort to finally manufacture that ever elusive “SEC registration” the Chair has been after? Would SBF have ended up with even more consumer assets under his control? https://t.co/HCGusAVQPt

— Stuart Alderoty (@s_alderoty) November 14, 2022

Alderoty Slams SEC’s Move to Cajole Crypto Companies

Ripple General Counsel also addressed Gensler’s frequent calls to crypto-related companies, asking them to “come in and register.” The SEC does not need to cajole cryptocurrency companies into registering if the agency was crypto’s lawful cop on the beat, Alderoty said.

He added that financial regulators with proper jurisdiction do not cajole or bully firms into entering back-room deals. “That’s why regulation by enforcement has been the SEC’s go-to,” Alderoty added. It is worth noting that Gensler has repeatedly asked cryptocurrency companies to come in and talk with the SEC to register with the agency. 

Last year, Brad Garlinghouse slammed the SEC’s so-called meetings with crypto firms, saying the agency uses these meetings as lead generation for their enforcement actions.

Instead of working with the industry, the SEC is using their meetings with companies as lead generation for their enforcement actions. Once the dust settles, it’ll be clear that Ripple’s on the right side of the law, and the right side of history. 2/2

— Brad Garlinghouse (@bgarlinghouse) September 25, 2021

According to Alderoty, the SEC’s tortured enforcement process is the punishment, which sometimes forces most companies to settle. 

“With settlement in hand, the SEC then pretends it has lawful jurisdiction – when all it has is a coerced surrender,” he said. 

The Ripple General Counsel cited BlockFi as an example of a crypto company the SEC forced into a settlement. Recall that BlockFi was asked to pay $100 million earlier this year to settle with the SEC over claims that its interest accounts violated U.S. securities laws. However, the crypto lender could not afford the fine then, which allowed BlockFi to be bailed out by Bankman-Fried.

Instead BlockFi was allowed (by who?) to be “rescued” by SBF, who – if reports are true – got access to BlockFi’s assets including customer deposits. And once again, the bankruptcy lawyers are getting rich while consumers are left holding the bag.

— Stuart Alderoty (@s_alderoty) November 14, 2022