Ripple’s Chief Legal Officer Stuart Alderoty has strongly criticized Gurbir Grewal’s, the Director of Enforcement at the Securities and Exchange Commission (SEC), comment about the crypto industry’s compliance efforts.
At a recent SEC event, Grewal suggested that the emerging industry was utilizing various methods to evade the financial regulator’s oversight, such as relocating or registering in different jurisdictions.
The regulatory chief also addressed concerns about the SEC’s regulatory approach, denying claims of regulatory overreach and enforcing regulations beyond its mandate.
‘Misguided war on crypto’
However, Alderoty highlighted the biases in Grewal’s statement, pointing out that while the SEC chief praised the financial regulator’s enforcement actions, he overlooked instances of regulatory overstep and abuses of power from the Commission.
He said:
“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.”
Alderoty also criticized the SEC’s whimsical application of the Howey test, which has led to confusion and inconsistency within the emerging industry. He explained:
“[Grewal] says the SEC has given clear crypto guidance, but that ‘guidance’ which is still on its website today, adds and subtracts factors to the Howey test at whim, leading to what the agency’s former General Counsel said was ‘greater confusion.’”
According to the Ripple executive, the SEC must address these issues to restore credibility and trust. He further urged the regulator to acknowledge and rectify the institutional damage caused by its approach to crypto regulation, emphasizing the need for greater transparency and accountability.
“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 soap box and own up to these truths,” Alderoty concluded.
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