Ripple’s Chief Legal Officer, Stuart Alderoty, has delivered a scathing critique of Gurbir Grewal, the Director of Enforcement at the Securities and Exchange Commission (SEC), regarding comments made about the compliance efforts within the crypto industry.
During a recent SEC event, Grewal suggested that the burgeoning crypto sector was employing various tactics to circumvent regulatory oversight, such as relocating or registering in different jurisdictions. He also addressed concerns regarding the SEC’s regulatory approach, refuting allegations of overreach and exceeding its regulatory mandate.
Alderoty, however, highlighted the inconsistencies in Grewal’s remarks, pointing out instances where the SEC had potentially overstepped its bounds and abused its authority. He specifically mentioned the DebtBox sanctions for “gross abuse of power,” a Ripple judge’s criticism for lacking “faithful allegiance to the law,” and the “arbitrary and capricious” ruling in the Grayscale case.
Moreover, Alderoty criticized the SEC’s erratic application of the Howey test, a standard used to determine whether certain transactions qualify as investment contracts. He noted that the SEC’s guidance on the Howey test, still present on its website, fluctuates arbitrarily, leading to confusion and inconsistency within the industry.
According to Alderoty, the SEC must address these concerns to restore credibility and trust. He urged the regulator to acknowledge and rectify the institutional damage inflicted by its approach to crypto regulation, emphasizing the necessity for enhanced transparency and accountability.
In conclusion, Alderoty emphasized that if the SEC genuinely aims to mend the institutional harm caused during what he termed as a “misguided war on crypto,” it must confront these truths and adopt a more responsible and balanced regulatory stance.
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