SEC’s Shakedowns Leave Consumers Holding The Bag – Ripple Counsel

SEC’s shakedowns leave consumers holding the bag says Ripple Labs General Stu Alderoty, who said this in response to a recent opinion by Securities and Exchange Commission chairman Gary Gensler. In his response, he claimed that the regulator’s crypto market shakedowns aren’t safeguarding consumers.

Alderoty alleged in an Aug. 28 opinion post in the Wall Street Journal (WSJ) headlined “The SEC Wants to Be America’s Crypto Cop” that the SEC is “pushing aside his follow regulators” rather than focusing on giving regulatory certainty for crypto.

He cited the SEC’s recent “shakedown” of BlockFi, which resulted in the firm ending up “on the auction block” and two other comparable companies going “belly up,” arguing that SEC’s shakedowns leave consumers holding the bag. The original statement is below:

“Consumers weren’t protected, they were left holding the bag.”

The column was written in reaction to Gensler’s Aug. 19 article “The SEC Treats Crypto Like the Rest of the Capital Markets,” which justified the regulator’s attack on the crypto business and was also published on WSJ.

The Ripple counsel, on the other hand, claims that the SEC hasn’t offered enough clarification on crypto regulation and instead describes itself as “the cop on the beat” for crypto.

He believes the chairman is “pushing aside his other regulators” and “front-running” President Biden’s executive order requesting cooperation from regulators on crypto regulation.

The executive order alluded to by Alderoty is the “Ensuring Responsible Development on Digital Assets,” which was signed on March 9, 2022, to guarantee that both the SEC and the Commodity Future Trading Commission (CFTC) coordinate and collaborate on the establishment of a crypto regulatory framework.

According to Aldetory, the SEC has not followed the executive order and has not offered any “regulatory clarity for crypto,” instead “preserving its territory at the expense of more than 40 million Americans in the crypto economy.”

In his piece, Gensler stated that federal security rules in the United States were created to safeguard investors and that “there’s no reason to treat the crypto market differently from the rest of the capital markets simply because it employs a different technology.”

Many opponents disagree, with Forbes writer Roslyn Layton citing the SEC’s intention to quadruple its Crypto Assets and Cyber Unit workforce, as well as the SEC’s “regulation by enforcement” strategy, in an Aug. 28 opinion post.

Earlier this month, U.S. Attorney John Deaton also accused Gensler and the SEC of purposely targeting cryptocurrencies, and that they had overstepped their present regulatory authority:

“It doesn’t take a constitutional law expert to understand that the SEC has limited jurisdiction over the crypto industry; barring congressional action, front line regulation of digital assets belongs with the Commodity Futures Trading Commission — the main regulator of investments that are not deemed traditional securities.”

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