Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, continues to lash out at the Securities and Exchange Commission (SEC) and its chair, Gary Gensler, asserting that the regulatory body is facing criticism from federal judges for its questionable conduct.
Judicial Backlash Against SEC’s Tactics
In a recent Twitter post, Alderoty highlighted the SEC’s string of legal defeats, emphasizing that federal judges are taking issue with the commission’s questionable practices. He underscored the government’s internal auditor’s rebuke of the SEC for withholding information about a meeting with a felon, further tarnishing the commission’s credibility.
Notably, Alderoty took a direct jab at SEC Chair Gary Gensler, likening him to the “insulate Col. Jesseup” character from the movie “A Few Good Men.” This latest criticism adds fuel to the ongoing tension between Ripple and the SEC.
Related article: Ripple Potential Lower Penalty in SEC Lawsuit Sparks Speculation
Ripple and Grayscale Victories Against SEC
This public rebuke is not the first time Alderoty has called out the SEC. Ripple faced SEC charges in December 2020, alleging violations of federal securities law through the sale of XRP. However, the court ruled against the SEC, affirming that XRP is not inherently a security, and most of Ripple’s transactions did not breach the law. Judge Analisa Torres, overseeing the Ripple case, criticized the SEC for its inconsistent legal theories.
In a parallel blow to the SEC, crypto asset manager Grayscale Investments secured a victory over the SEC’s rejection of its spot Bitcoin exchange-traded fund (ETF) application. The judge condemned the SEC’s regulatory approach as arbitrary and capricious.
Alderoty Points to Govil Ruling’s Ripple Effect
Recently, Alderoty brought focus to the SEC’s setback in the Second Circuit against Aaron Govil. The ongoing SEC v. Ripple lawsuit stands to be significantly impacted by this case. Legal experts maintain that the Govil ruling could exert influence in the remedies phase, arguing that the SEC should exclusively impose penalties on victims who suffered economic losses.
Ripple’s Potential Relief from $770 Million Fine
The SEC is expected to seek a hefty fine of $770 million from Ripple for alleged law violations related to institutional sales of XRP. However, Alderoty and legal experts such as John Deaton and Jeremy Hogan speculate that Ripple may reduce this amount by excluding non-US sales and factoring in legitimate business expenses.
As the Ripple case progresses to the remedies phase, with the court issuing a scheduling order, all eyes are on the evolving legal landscape and the potential ramifications for Ripple and its ongoing battle against the SEC.