Ripple CLO Expects a U.S. Rep Member to Read XRP Non-Security Status Ruling During SEC Chair Testimony

Ripple’s chief legal officer (CLO) is expecting a U.S. rep member to read Judge Analisa Torres’ ruling on XRP during SEC chair Gary Gensler’s upcoming testimony. 

Stuart Alderoty, the Chief Legal Officer (CLO) at Ripple Labs, has reacted to SEC’s chair Gary Gensler’s upcoming testimony. 

It is worth noting that Gensler is expected to testify before the United States Committee on House Financial Services later today. 

Fox Business Journalist Shares Gensler’s Testimony 

Ahead of the testimony, Fox Business journalist Eleanor Terrett took to the X platform to share a copy of Gensler’s comment on cryptocurrencies. 

🚨NEW: @SECGov Chairman @GaryGensler’s testimony for tomorrow’s House Financial Services hearing has been released.

Here are his comments on #crypto 👇🏼 pic.twitter.com/Ne0NaK3n6x

— Eleanor Terrett (@EleanorTerrett) September 26, 2023

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In the speech, Gensler referred to the crypto market as the “crypto asset securities market.” 

“There is nothing about the crypto asset securities market that suggests that investors and issuers are less deserving of the protection of our securities law,” an excerpt of the remark read. 

Gensler reiterated that most crypto assets satisfy the “investment contract” test. The SEC boss added that since most crypto assets are subject to securities laws, exchanges must also comply with the rules.  

Furthermore, Gensler stated that the SEC has been addressing the “crypto asset securities market” with both enforcement actions and rulemaking. 

He, however, promised not to comment on any active SEC litigation against crypto-related businesses, including Binance, Ripple, and Coinbase.  

Gensler Will Lie During His Testimony

Expectedly, Gensler’s speech stirred reactions from top crypto stakeholders, with Alderoty joining the discussion.   

Reacting to the speech, Alderoty said Gensler would be going to Congress to lie by stating that there is something called a “crypto asset securities market” and that tokens themselves are investment contracts.  

However, Alderoty speculated that maybe a representative would counter Gensler’s claim and read a part of the Ripple ruling where the judge declared that XRP itself is not a security. 

2/ Perhaps just one representative will read this line from the Court’s 7/13/23 decision in the Ripple case: “XRP, as a digital token, is not in and of itself a “contract, transaction[,], or scheme” that embodies the Howey requirements of an investment contract.

— Stuart Alderoty (@s_alderoty) September 26, 2023

Court Rules XRP Isn’t a Security 

Recall that the SEC previously alleged that XRP is a security. The regulator alleged that Ripple violated federal securities laws by selling XRP to US investors. 

However, the US District Court for the Southern District of New York (SDNY) declared that “XRP as a digital token, is not in and of itself a ‘contract, transaction[,], or scheme’ that embodies the Howey requirements of an investment contract.”  

Interestingly, the SEC is not seeking to challenge the court’s ruling on XRP’s non-security status. Notably, the SEC is only pursuing an interlocutory appeal to review the court’s decision on Ripple’s secondary sales of XRP.