The Chief Legal Officer of Ripple Labs, Stuart Alderoty, has harshly attacked the U.S. Securities and Exchange Commission (SEC) for how it uses the word “crypto asset security.” Alderoty says that this term, which the SEC has recently used in a number of court documents, is made up and has no legal base.
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
In a document sent on August 30, the SEC said it would be challenging FTX’s plans to use stablecoins to pay back its debts, calling these assets “crypto asset securities.” Alderoty replied on September 2 by calling the term “fabricated” and saying that the SEC was using it to try to trick judges.
In a recent federal court update about the crypto exchange Kraken, the court said that the word “crypto asset security” was “unclear at best and confusing at worst.” This criticism is similar to those worries.
Alderoty also talked about the SEC’s Wells warning to the NFT marketplace OpenSea, which said that tokens sold on the site might not be registered securities. Alderoty compared it to a decision the SEC made in 1976: an art store did not have to register, even if people wanted to buy art as an investment. He said that this case should guide how the SEC does things now, and he stressed that the SEC’s new position is different from how it has been interpreted in the past.
Fun fact: In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC. https://t.co/CtQJ3mlPkh pic.twitter.com/oR8EgGpXoo
— Stuart Alderoty (@s_alderoty) August 29, 2024
The SEC’s moves and warnings about stablecoins and NFTs show a larger problem with regulatory clarity in the crypto space. Ripple is fighting back against what it sees as bullying and unclear legal language.
