The Ripple Chief Legal Officer Stuart Alderoty has criticized SEC’s top enforcer and head of the Division of Enforcement, Gubir Grewal, following his recent comments about the crypto industry.
SEC Top Enforcer Bashes Crypto
During a recent “SEC Speaks” event, Grewal criticized the crypto industry for its alleged noncompliance and attempts to avoid regulation by the securities agency.
He also addressed criticisms that the SEC regulates the crypto industry through enforcement instead of clear rules. Grewal emphasized that the longstanding Howey test is the only test that determines whether an asset is a security.
He noted that the SEC has been consistent about the test, emphasizing that there are no secret analyses in determining which asset qualifies as a security.
Furthermore, Grewal claimed that the multiple criticisms crypto enthusiasts have leveled against the SEC recently are part of a plot to get a different set of rules for the industry.
He argued that the SEC acts with integrity and that its regulatory approach is consistent with its rules.
Alderoty Faults Grewal’s Integrity Claim
Commenting on the development, Alderoty slammed Grewal for claiming that the regulatory agency acts with integrity.
The outspoken CLO highlighted some crypto-related cases where federal courts have rebuked the SEC for overstepping its legal boundaries and not acting in good faith.
He recounted incidents in which a federal court sanctioned the SEC for gross abuse of power in its case against DEBT Box, and a district judge admonished the agency for lacking faithful allegiance to the law in the Ripple lawsuit.
Furthermore, Alderoty said Grewal claims that the SEC operates with integrity yet ignores a court’s characterization of the agency’s action as “arbitrary and capricious” in its lawsuit against Grayscale Investments.
Dir. Grewal says the crypto enforcement unit acts with integrity, but ignores the DebtBox sanctions for “gross abuse of power,” the Ripple Judge’s admonishment for lack of “faithful allegiance to the law,” and the “arbitrary and capricious” finding in the Grayscale case. https://t.co/rZnaumdBOd
— Stuart Alderoty (@s_alderoty) April 3, 2024
Alderoty Calls Out Grewal for Ignoring Ripple’s Victory
Delving deep into Grewal’s recent comment, Alderoty chided Grewal for only citing a portion of the Ripple ruling where the SEC won, while ignoring where the court held that XRP in and of itself is not a security.
Alderoty also recounted how the SEC dropped most of its case against Ripple, specifically the aiding and abetting charges filed against Brad Garlinghouse (Ripple CEO) and Chris Larsen (Ripple Chairman).
On Grewal’s claim that the SEC has given the crypto industry guidance, Alderoty said the so-called guidance, which is still available on the commission’s website, arbitrarily adjusts factors of the Howey test.
He added that the SEC’s modification of the Howey test prompted the agency’s former General Counsel to issue the “greater confusion” comment.
Conclusively, Alderoty recommended that the SEC “get off its soapbox and own up to these truths” to repair the institutional damage it has inflicted on itself and the crypto industry.
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