Ripple’s Legal Chief Blasts SEC for Using ‘Fabricated’ Term in Crypto Cases
The Chief Legal Officer at Ripple Stuart Alderoty has publicly criticized the U.S. Securities and Exchange Commission (SEC) over its use of the phrase “crypto asset security.”
In a post published on his official X account, the lawyer argued that the term is a made-up concept that has no legitimate grounding.
Lawyer, Court, Call Out Commission for Use of Phrase
In addition, Alderoty accused the financial watchdog of using the words to mislead judges and the public in its legal actions against the crypto industry.
“The term ‘crypto asset security’ is nowhere to be found in any statute—it’s a fabricated term with no legal basis,” the attorney stated in the September 2 social media post. “The SEC needs to stop trying to deceive judges by using it.”
His remarks came after the regulator, in an August 30 filing, warned that it might challenge any plan by the defunct crypto exchange FTX to use stablecoins to repay creditors. It claimed the exchange’s portfolio contains “crypto asset securities,” a term the Ripple counselor argues lacks any statutory definition.
Alderoty’s rebuke is not the first time the agency’s use of the contentious phrase has been questioned. Recently, a California court expressed similar sentiments in a case the Commission brought against crypto exchange Kraken. On that occasion, the court voiced its concern, describing the term as “unclear at best and confusing at worst.”
Highlighting SEC Inconsistencies
The attorney has repeatedly pointed out the inconsistencies in the regulator’s stance on the status of several digital assets.
Not long ago, it issued a Wells Notice to the OpenSea NFT marketplace, indicating a potential lawsuit on the grounds that some NFTs sold on the platform could be considered unregistered securities. Alderoty challenged the agency, stating that it had previously decided not to pursue enforcement action in a case eerily similar to OpenSea’s.
According to him, 48 years ago, the Commission ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with it. He argued that this precedent should extend to digital assets, where the intent is to foster innovation and creativity rather than adhere to outdated regulatory frameworks.
The SEC’s actions have sparked a broader debate within the crypto community about the need for clear and consistent regulations. Many industry leaders, including those at Ripple, argue that the financial watchdog’s approach, which often relies on enforcement rather than clear guidelines, creates uncertainty and stifles innovation.
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