Ripple Executives Criticize SEC Handling of Crypto Cases

Ripple executives have criticized the U.S. Securities and Exchange Commission (SEC) for its management of cases against the crypto industry.

On Tuesday, the SEC announced plans to modify its complaint against crypto exchange Binance regarding “Third Party Crypto Asset Securities,” which include SOL, ADA, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, as stated in a court filing.

The SEC has initiated multiple lawsuits against crypto firms over the past year, focusing on platforms it believes should be registered, while categorizing certain cryptocurrencies as securities. Last year, the agency sued Binance Holdings and its former CEO Changpeng Zhao, accusing the exchange of deceiving customers, failing to prevent U.S. investors from accessing Binance.com, mismanaging capital, and operating without proper registration.

Additionally, the SEC filed a lawsuit against crypto exchange Coinbase last year, alleging it was functioning as an unregistered exchange, broker, and clearing agency. The SEC claimed that SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO are “crypto asset securities.”

Stuart Alderoty, Ripple’s chief legal officer, commented on X, stating, “When a judge signals B.S. on the SEC’s claim that 10 tokens on Binance are securities, the SEC says ‘never mind.’ But these tokens are left out to dry in the Coinbase suit. This isn’t how to regulate.”

Ripple CEO Brad Garlinghouse described the amended Binance complaint as “hypocrisy,” asserting that SEC Chair Gary Gensler claims regulations are clear, yet the SEC appears confused and inconsistently applies them, causing further confusion within the industry.

The SEC’s ongoing legal battle with Ripple began years ago when it accused the firm of raising $1.3 billion through the sale of XRP, which it claims is an unregistered security. A recent ruling by Judge Analisa Torres determined that certain programmatic sales of XRP did not violate securities laws due to a blind bidding process, while direct sales to institutional investors were deemed securities.

Gary Gensler has consistently asserted that crypto platforms must register with the SEC, maintaining that most cryptocurrencies fall under the category of securities.

Other Opinions

Justin Slaughter, policy director at Paradigm, mentioned that some may be misinterpreting the SEC’s filing and that the agency could still consider those tokens as securities in other situations. He highlighted that the judge in the Binance case indicated a likelihood of determining that the tokens were not securities at all times.

“So rather than risk another adverse ruling, they’re backing down,” Slaughter noted. However, he added that there are no indications of a similar filing in the Coinbase case, which proved less detrimental for the SEC.