The conflict between Ripple Labs and the SEC over the XRP lawsuit escalated as Ripple’s Chief Legal Officer Stuart Alderoty accused the SEC of not providing clear guidelines for crypto regulation. Alderoty criticized the SEC’s lack of transparency and consistency in providing clear crypto guidance and using the Howey test to determine whether an offering constitutes a security. He called on the SEC to take responsibility for the damage caused by its regulatory actions in the crypto industry.
Alderoty specifically targeted SEC Director of Enforcement Gurbir Grewal’s recent speech, where Grewal praised the SEC’s application of the Howey test to protect investors in the crypto space. Alderoty pointed out that the SEC lost or abandoned most of its claims in the Ripple lawsuit, where the court rejected the SEC’s assertion that XRP was a security. Despite this, Grewal emphasized in his speech that federal securities laws apply equally to everyone, including Ripple.
The ongoing dispute between Ripple and the SEC dates back to late 2020 when the SEC filed a lawsuit against Ripple, alleging that the crypto exchange violated securities laws by offering unregistered securities. Ripple achieved a partial victory in the case when the court ruled that the SEC’s claim regarding XRP being a security was incorrect. However, the court found Ripple guilty of offering XRP to institutional buyers in violation of security laws.
In response to Grewal’s comments, Alderoty called on the SEC to acknowledge the damage caused by its regulatory actions in the crypto industry and to provide clear guidance for companies operating in the sector. He criticized the SEC for its lack of transparency and consistency in applying the Howey test and urged the agency to take responsibility for the consequences of its actions.
The conflict between Ripple and the SEC highlights the ongoing debate over crypto regulation and the classification of digital assets as securities. The outcome of the trial between Ripple and the SEC later this month will have significant implications for the crypto industry and could set a precedent for future regulatory decisions. Both parties continue to clash over the classification of XRP as a security, with Ripple maintaining that XRP is not a security, while the SEC argues that federal securities laws apply to all offerings in the crypto space. Alderoty’s accusations against the SEC further underscore the lack of clarity and consistency in regulatory enforcement in the crypto sector.
