Ripple’s chief legal officer has accused the U.S. Securities and Exchange Commission (SEC) of fabricating the term “crypto asset security.”
Ripple CLO Stuart Alderoty says the term has no legal basis and “is nowhere to be found in any statute.”
“The SEC needs to stop trying to deceive judges by using it.”
The SEC has employed the terminology in a flurry of lawsuits against crypto firms and exchanges, though Alderoty specifically brought it up in reference to the regulator’s recent filing in FTX’s bankruptcy case.
The SEC recently announced that it was reserving its right to challenge the FTX bankruptcy estate’s distribution plan, arguing that the exchange’s portfolio includes “crypto asset securities.”
“The Debtors are exploring different distribution options, including potentially distributing stablecoins to certain creditors… In addition, the Debtors have not identified the distribution agent, which may potentially distribute stablecoins to creditors under the Plan.
The SEC is not opining as to the legality, under the federal securities laws, of the transactions outlined in the Plan and reserves its rights to challenge transactions involving crypto assets.”
Alderoty isn’t the only crypto figure hitting back at the regulator.
Alex Thorn, Galaxy Digital’s head of research, says the SEC’s attempt to reserve its right to refer to dollar-backed stablecoins as “crypto asset securities” represents the “height of jurisdictional overreach.”
“It’s quite absurd if you think about it. No one, including most other regulators and both parties, thinks the SEC should have oversight of genuine ‘number stay flat’ technologies.
The SEC doesn’t even make a case here. They are just unwilling to let it go. It’s a bludgeon they must keep sharp, lest any legitimate actors deign to wield these (boringly above-board) instruments.”
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