In a heated exchange, Stuart Alderoty, Ripple’s Chief Legal Officer (CLO), has sharply criticized Gubir Grewal, head of the Enforcement Division at the U.S. Securities and Exchange Commission (SEC). The clash erupted at the “SEC Speaks” event, where Grewal condemned the crypto industry for alleged regulatory evasion, sparking a spirited debate on the SEC’s crypto regulation approach.

Grewal’s Critique

At the “SEC Speaks” event, Grewal didn’t hold back, accusing the crypto sector of skirting regulations. He vigorously defended the SEC’s consistent use of the Howey test, a standard for identifying securities, stressing the agency’s commitment to rule application. Despite facing criticism for its strict enforcement, Grewal remained resolute, asserting the agency’s adherence to established norms.

Brutal Rebuttal

In response to what Grewal said, Alderoty pointed to instances where federal courts have rebuked the SEC for its handling of crypto-related cases. He gave examples where courts said the SEC went too far and didn’t act honestly.

Dir. Grewal says the crypto enforcement unit acts with integrity, but ignores the DebtBox sanctions for “gross abuse of power,” the Ripple Judge’s admonishment for lack of “faithful allegiance to the law,” and the “arbitrary and capricious” finding in the Grayscale case. https://t.co/rZnaumdBOd

— Stuart Alderoty (@s_alderoty) April 3, 2024

He highlighted precedents where courts chastised the SEC’s actions, notably in the DEBT Box case and the Ripple lawsuit. Alderoty emphasized the court’s ruling that Ripple’s XRP isn’t a security, despite partial victories for the SEC, casting doubt on the agency’s initial claims.

Read More: Ripple vs SEC Heats Up: Howey Test Challenged in Landmark Crypto Case

SEC’s Position Weakens

Alderoty didn’t shy away from highlighting the SEC’s withdrawal from significant charges against Ripple executives, suggesting vulnerabilities in the SEC’s original assertions.

On the substance, he cites one portion of the Ripple ruling but ignores that the SEC lost or gave up on most of its claims in the case, including the Court’s rejection of the SEC’s assertion that XRP was in and of itself a security.

— Stuart Alderoty (@s_alderoty) April 3, 2024

Expressing concern over the SEC’s revisions to the Howey test, he echoed worries voiced by the SEC’s former legal expert regarding the test’s confusing changes. Alderoty urged the SEC to acknowledge shortcomings and work towards improving its image and relationship with the crypto sector.

Urgent Call for Clarity

Alderoty’s remarks underscore the persistent tension between the SEC and the crypto community, emphasizing the urgent need for clear and consistent regulatory guidance. The clash between Ripple’s CLO and the SEC’s Enforcement Division chief highlights broader tensions in the industry.

As the divide between Ripple and the SEC widens, the clash between Alderoty and Grewal reflects the broader struggle for regulatory clarity in the crypto space. Will we ever reach a solution? Only time will tell.

Did You Know? SEC Seeks Public Feedback for Grayscale, Fidelity, Bitwise Ethereum ETFs

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