Crypto lawsuit sparked by SEC shows a “troubling pattern”

Stuart Alderoty, Ripple’s Chief Legal Officer took to the X app to outline some discrepancies which he tagged “troubling patterns” in the crypto lawsuits initiated by the United States Securities and Exchange Commission (SEC).

Disturbing Trends in SEC-led Crypto Lawsuits

One of the high-profile cases here is the Coinbase and SEC lawsuit which has been on for a while and has constantly escalated from one level to another in the last couple of months. Beyond Coinbase, Ripple’s CLO discovered certain patterns that the SEC has consistently exhibited in different lawsuits including that featuring Ripple Labs, and Grayscale Investments among others.

First, Alderoty pointed out that the court discovered that the SEC exhibited some form of hypocrisy by putting out inconsistent arguments during its lawsuit with crypto payment firm Ripple. The regulator was also accused of failing to act out of a “faithful allegiance to the law.” 

It is worth noting that the Ripple executive highlighted these shortcomings last year in the heat of the Ripple vs SEC lawsuit.

Again, Coinbase has been at loggerheads with the regulator over the lack of clarity on crypto regulation. Earlier this year, Coinbase filed a Mandamus petition against the agency after it had earlier requested, to no avail that the SEC should provide regulatory clarity for the crypto industry. In response to the crypto exchange’s request, the SEC dismissed the claims citing that they were baseless.

In the ‘troubling patterns’ uncovered, the court also agrees that the SEC failed to carry out its duty of responding in good faith to Coinbase’s petition for crypto rulemaking.  

SEC’s Allegiance Under Scrutiny

With respect to its legal battle with Grayscale which began after the SEC rejected the firm’s application to convert its Grayscale Bitcoin Trust (GBTC) to a physically-backed product, Alderoty highlighted that the court noticed the SEC’s “inconsistent treatment of similar products is arbitrary and capricious.” 

This revelation was pivotal to the verdict of the case at the end of the day. Grayscale scored a victory the case after the judge said that the SEC failed to recognize the “obvious financial and mathematical relationship between the spot and futures markets.” 

The last pattern outlined by Ripple CLO was the fact that the court ordered the SEC to give a reason why it should not be sanctioned for providing false and misleading representation of Debt Box to the court.

All of these discrepancies are likely to threaten the operations of the U.S SEC as it concerns its crypto lawsuit, allegiance, and rulemaking and may be a factor in shaping the future role of Gary Gensler, the agency’s chairman. 

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture. Follow him on Twitter, Linkedin

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