Ripple CLO says SEC needs to stop deceiving judges, slams use of term ‘crypto asset securities’
- Ripple Chief Legal Officer condemns the SEC’s use of the term ‘crypto asset securities.’
- SEC refers to crypto assets as securities in its litigation against the bankrupt FTX exchange and in Ripple’s lawsuit.
- Ripple executive says the term is fabricated, the regulator allegedly deceives judges, and has no ‘legal basis.’
Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, reacted to the US Securities & Exchange Commission’s (SEC) use of the term ‘crypto asset securities’ in lawsuits against cryptocurrency exchanges and firms.
Legal experts and executives at different crypto projects sided with Alderoty. While the US financial regulator alleges cryptocurrencies are digital asset securities, per information on the official website of the Commodity Futures Trading Commission (CFTC), virtual currencies such as Bitcoin have been determined as commodities under the Commodity Exchange Act (CEA).
SEC says cryptocurrencies are crypto asset securities, what this means
SEC refers to crypto as “crypto asset securities” in the lawsuit against Ripple, the litigation against the bankrupt FTX exchange, and other firms. Ripple’s CLO shared his thoughts on the term and the regulator’s actions.
Alderoty said the SEC is using the term that has no legal basis to “deceive judges.” In the SEC vs. Ripple lawsuit, Judge Analisa Torres ruled that XRP, the native token of the XRP Ledger, is not a security in secondary market transactions. This means XRP gained legal clarity and is not considered a security in transactions on cryptocurrency exchanges.
The decision from July 2023 was upheld in the final ruling, and XRP has legal clarity, unlike other altcoins. In its litigation against other crypto firms, the SEC continues its usage of the term ‘crypto asset securities.”
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
Katherine Minarik, CLO at Uniswap Labs discussed the SEC’s use of the term in its lawsuit against crypto exchange Kraken.
Even the Kraken judge, who gave the SEC every last benefit of the doubt, called on the SEC’s undefined term “crypto asset securities.” One week later the SEC tells another court that bankruptcy assets are “crypto asset securities” - maybe. This is not real law or due process. https://t.co/m2u7cgdOJE pic.twitter.com/C784nDIhO2
— Katherine Minarik (@MinarikLaw) September 3, 2024
Zach Rosenberg, Legal Counsel at Ethena Labs, commented on the SEC’s use of the term for cryptocurrencies in the charges that the regulator settled against former investment adviser Galois Capita.
As is typical, the Order does not even make reference to the specific tokens the SEC believes were "sold as crypto asset securities" in the order, and provides essentially zero rationale as to why something "sold as a security" is subject to the Custody Rule in the first place.…
— Meat (,) (@MeatEsq) September 3, 2024
The CFTC considers virtual currencies like Bitcoin and Ethereum a commodity. The crypto community awaits legal clarity on digital assets, while the SEC regulates the industry through enforcement, and crypto exchange platforms and trading firms face litigation.
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