Ripple CLO Criticizes SEC’s Top Officer Gubir Grewal Amid Crypto Regulation Debate

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Stuart Alderoty, the Chief Legal Officer (CLO) of Ripple, has slammed Gubir Grewal, the head of the Enforcement Division at the U.S. Securities and Exchange Commission (SEC), for his opinion regarding the crypto industry and the SEC’s regulatory practices.

SEC’s Grewal Under Fire

At an event called “SEC Speaks,” Grewal criticized the crypto world, saying it’s not following the rules and trying to dodge SEC regulations. Meanwhile, Grewal defended the SEC’s use of the Howey test, which determines whether an asset is a security, highlighting the agency’s consistency in applying this test.

Despite receiving a lot of criticism for focusing too much on enforcing rules, Grewal remained steadfast, asserting that the agency’s actions are in line with established rules and regulations.

Ripple CLO Slams ED

In response to what Grewal said, Alderoty pointed to instances where federal courts have rebuked the SEC for its handling of crypto-related cases. He gave examples where courts said the SEC went too far and didn’t act honestly.

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

Alderoty pointed out a case where a court punished the SEC in the DEBT Box case and another where a judge scolded them in the Ripple lawsuit. Alderoty further noted that while the SEC may have won some aspects of the case, the court also ruled that Ripple’s XRP itself is not a security.

Additionally, Alderoty even pointed out the SEC’s decision to drop significant charges against Ripple executives, suggesting weaknesses in the SEC’s initial allegations.

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.

— Stuart Alderoty (@s_alderoty) April 3, 2024

Critique of SEC’s Guidance

Addressing the SEC’s guidance to the crypto industry, Alderoty expressed concern over the agency’s modification of the Howey test. He referenced criticism from the SEC’s former legal expert, who deemed the changes confusing.

Alderoty wants the SEC to admit they messed up and try to fix things with their image and the crypto industry.

Meanwhile, Alderoty’s remarks underscore ongoing tensions between the SEC and the crypto community, highlighting the need for clarity and consistency in regulatory enforcement.

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