- Ripple CLO claims the SEC's "crypto asset security" term is fabricated without legal grounding.
- Ripple accuses the SEC of using misleading terms to influence court decisions against crypto firms.
- The SEC's crackdown on crypto firms, including FTX and OpenSea, raises industry-wide concerns.
Ripple’s CLO, Stuart Alderoty, condemned using the term “crypto asset security” by the U. S. Securities and Exchange Commission (SEC) in its filings. According to Alderoty, the term has no legal foundation and claims it to be an invented term designed to influence legal cases involving firms dealing in cryptocurrencies. The Ripple executive's concerns were captured in his latest post on X, where he accused the SEC of using misleading terms to manipulate the Judges.
Ripple's Concerns Over the SEC's Actions
The SEC used “crypto asset security” in its legal issue with the FTX exchange. The Bahamas based crypto exchange platform shut down in 2022 after mismanaging its customers' funds.
As it stands, FTX is trying to repay all the company creditors that fell out. The company intends to pay up to $16.3 billion through an organization altering a new restructuring plan that utilizes cash and stablecoin intermediates.
The SEC has criticised this plan, stating its authority to condemn crypto asset transactions. For instance, the bankruptcy occurred because FTX’s portfolio was comprised of so called “crypto asset securities,” which the agency plans to sell to cover the debts.
Ripple CLO's Argument Against SEC Terminology
Thus, Alderoty’s intervention implies that the SEC's use of these terms is somewhat unclear and unlawful. He, however, notes that “crypto asset security” is not a term found in any other statute.
To him, the SEC uses it to deceive the judiciary and tilt legal perspectives to serve its ends. Ripple's CLO has called for the agency to cease using such methods, which would adversely affect the rest of the cryptocurrency business.
Wider SEC Crackdown on Crypto Firms
Further, there are more signs that the SEC is taking an aggressive approach against companies in the cryptocurrency field, not only Ripple and FTX. However, the regulatory body has recently initiated legal actions against several large scale companies, such as Robinhood, Kraken, ConsenSys, Uniswap, and Coinbase, for violating securities laws.
Most recently, OpenSea, one of the biggest NFT marketplaces, received a Notice from the SEC stating that digital collectables featured on its platform may be classified as unregistered securities. Another decentralized exchange, Uniswap, received a similar notice months ago.
These actions have stirred up the conversation in the crypto space about regulation under Gary Gensler's chairmanship. There is still a thought that things in the regulation aspect might change after a new government comes into power after November’s elections to provide both sides with a fairer atmosphere.
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