Alderoty Fact Checks SEC Chair, Says Ripple Was Never Charged With Dishonesty

Ripple CLO reacts to SEC Chair Gary Gensler’s recent speech, emphasizing that the securities regulator did not charge Ripple based on dishonesty. 

Stuart Alderoty, Ripple’s chief legal officer (CLO), has taken to X to react to SEC chair Gary Gensler’s remark before the 2023 Securities Enforcement Forum. 

Gensler Latest Remark On SEC Enforcement Actions 

During the event, which took place last month, Gensler delivered a keynote address, highlighting the commission’s progress throughout the year. 

Interestingly, Gensler cited some remarks from past SEC chairs, especially Joseph P. Kennedy, the commission’s first chairman. One of Kennedy’s remarks Gensler quoted reads: 

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“We are not prosecutors of honest business nor defenders of crookedness. We are partners of honest business & prosecutors of dishonesty. We shall not prejudge, but we shall investigate.” 

Alderoty Says Ripple Wasn’t Charged With Dishonesty 

However, Alderoty fact-checked Gensler, pointing out how the SEC refused to follow Kennedy’s recommendation in the Ripple lawsuit. 

In a tweet today, Alderoty stated that although the SEC sued Ripple, the commission never charged the blockchain company with dishonesty. In contrast to Gensler’s claim, Alderoty said the Ripple case was prejudged, beginning with former SEC director William Hinman. 

Fact check Gensler’s recent remarks. Ripple was sued, but never charged with “dishonesty.” The failed case against it was prejudged, beginning with the ethically compromised Bill Hinman. Gensler has prejudged crypto and has filed suit against others w/o investigation. https://t.co/Th9I8Or4QC

— Stuart Alderoty (@s_alderoty) November 17, 2023

In December 2020, the SEC charged Ripple with violating securities law. The SEC alleged that Ripple raised $1.3 billion via the sale of XRP, an asset it labeled as an unregistered security. 

However, the SEC suffered a major defeat against Ripple after a federal court rejected some of its claims. In the landmark ruling, Judge Analisa Torres declared that XRP in itself is not a security. 

She also ruled that Ripple did not violate the law via its programmatic sales of XRP and other distributions. Conversely, the judge ruled in SEC’s favor regarding Ripple’s past and direct sales of XRP to institutional clients. 

Gensler Prejudged Crypto Without Investigation

Aside from the Ripple case, Alderoty claims that Gensler has prejudged crypto and filed multiple lawsuits without proper investigation. The Ripple CLO made the remark in reference to the commission’s lawsuit against other crypto companies like LBRY, Coinbase, and Binance. 

Recall that the SEC charged all three companies with violating federal securities laws. While the SEC recorded a major victory in the LBRY case, the commission’s lawsuit against Binance and Coinbase remains ongoing. 

The lawsuit against Binance and Coinbase saw the SEC label various crypto assets as securities, including BNB, BUSD, ADA, and COTI. Gensler has continued to claim that Bitcoin is the only crypto asset he considers to be outside the SEC’s regulatory purview.