Ripple’s Chief Legal Officer Blasts SEC Over Crypto Regulation, XRP Lawsuit: “Get Off Your Soap Box”

The ongoing conflict between Ripple Labs and the SEC centered on the XRP lawsuit intensified on Wednesday, with Ripple’s Chief Legal Officer Stuart Alderoty accusing the SEC of failing to provide clear guidelines for crypto regulation. The statement was made in response to SEC Director of Enforcement Gurbir Grewal’s Tuesday speech, which cited the year-long XRP lawsuit.

SEC Needs To Own Up To War On Crypto, Ripple Lawyer Says

Following remarks at the Practicing Law Institute condemning the crypto sector’s non-compliance with regulators, Alderoty alleged that Grewal’s statements failed to paint a clear picture of the regulatory atmosphere. In a string of X posts, Alderoty claimed that the SEC has failed to provide “clear crypto guidance” while adding and subtracting “factors from the Howey test at whim.”

Dir. Grewal says the crypto enforcement unit acts with integrity, but ignores the DebtBox sanctions for “gross abuse of power,” the Ripple Judge’s admonishment for lack of “faithful allegiance to the law,” and the “arbitrary and capricious” finding in the Grayscale case. https://t.co/rZnaumdBOd

— Stuart Alderoty (@s_alderoty) April 3, 2024

Established by the U.S. Supreme Court in 1946, The Howey test is a legal framework designed to adjudicate what offering constitutes an investment contract (a.k.a. security) and has been at the heart of critical regulatory debate regarding the crypto sector.

On Tuesday, Grewal seemingly lauded the SEC’s application of the Howey test, stating that “the SEC has clearly and consistently applied Howey and its progeny to protect investors in the crypto space.”

“If this Agency wants to honestly repair the institutional damage inflicted (both to itself and the industry) over the last many years in this misguided war on crypto, it needs to get off its soapbox and own up to these truths,” Alderoty countered.

SEC And Ripple Face-Off On Crypto Regulation After XRP Lawsuit

Alderoty took aim at Grewal’s comments in an additional X post, particularly regarding the SEC’s years-long litigation against Ripple over its cryptocurrency

token, XRP.

“On the substance, he cites one portion of the Ripple ruling but ignores that the SEC lost or gave up on most of its claims in the case, including the Court’s rejection of the SEC’s assertion that XRP was in and of itself a security,” Alderoty noted.

The SEC originally filed the controversial lawsuit against Ripple in late 2020, alleging that the crypto exchange broke the law by offering unregistered securities. 

Ripple won a partial victory in the case last year, with U.S. District Court Judge Analisa Torres ruling that the SEC’s unregistered securities claim was incorrect.

Torres found the crypto exchange guilty of breaking security laws by offering XRP to several institutional buyers, however.

Grewal cited the XRP lawsuit in his speech, claiming that “court after court has confirmed” that “federal securities laws apply equally to everyone.”

“You don’t get your own rules,” he added.

Ripple and the SEC are due to face off in a trial later this month regarding the classification of XRP as a security.