Ripple’s Chief Legal Officer, Stuart Alderoty, recently raised concerns over the SEC’s continued classification of XRP as a security, despite a court ruling stating otherwise. In a post on X, Alderoty suggested that the SEC’s actions could potentially undermine the legitimacy of regulatory enforcement.
This commentary comes in the midst of a new lawsuit involving the crypto exchange Bitnomial, where the SEC reiterated its stance that XRP is a security. It’s important to note that back in July 2023, District Judge Analisa Torres ruled that XRP, by itself, is not considered a security.
The Bitnomial Lawsuit Challenges SEC Over XRP Futures
Bitnomial, a crypto derivatives exchange, recently filed a lawsuit against the SEC in an Illinois district court. The lawsuit aims to challenge the agency’s assertion that Bitnomial’s proposed XRP Futures contract falls under SEC jurisdiction.
Bitnomial had sought approval from the U.S. Commodity Futures Trading Commission (CFTC) to launch the product. However, the SEC warned the exchange that the contract would violate federal securities laws unless it complied with SEC regulations.
In response, Bitnomial argued that the SEC had selectively referenced court briefs to support its claim that XRP is a security, while omitting key parts of Judge Torres’ ruling that XRP itself is not inherently a security.
Ripple Executives Respond
Ripple CEO Brad Garlinghouse also criticized the SEC, referring to it as a “renegade agency” in a recent tweet. Garlinghouse expressed his concern that the SEC was disregarding the court’s decision that XRP is not a security. He mentioned that Ripple is exploring legal options to hold the SEC accountable for its actions.
Garlinghouse’s comments reflect Ripple’s worries that the SEC’s actions could set a precedent where regulatory agencies pressure companies to comply, even after losing in court.
Additionally, Ripple’s lead counsel, Alderoty, compared the situation to a hypothetical law school exam scenario where a regulatory agency loses in court but continues to threaten enforcement to compel compliance. Alderoty emphasized the constitutional concerns raised by this situation and how it could compromise the legitimacy of the agency.
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