Stuart Alderoty, chief legal officer (CLO) at Ripple, has recently reacted to the news of a federal judge who threatened to sanction the United States Securities and Exchanges Commission (SEC) for apparent deception in an ongoing crypto lawsuit.
According to a court filing, the SEC was attempting to convince the court to freeze a crypto firm’s assets under false and misleading pretenses
Between the SEC and Debt Box
In the order issued by U.S. District Judge Robert Shelby of the U.S. District Court in Utah, the SEC lawyers could be sanctioned for making misleading arguments about cryptocurrency firm Debt Box.
The SEC had alleged that Debt Box made efforts to transfer its assets and investors’ funds overseas, which led to the freezing of the project’s bank accounts.
According to the Judge in an order, aside from causing Debt Box irreparable harm, the SEC’s misrepresentations undermined the integrity of the case’s proceedings.
In August, a federal Judge slapped Debt Box with a temporary restraining order, which led to the restriction of access to its assets. Howbeit, the restriction order was lifted after the firm proved that it had neither moved funds outside the United States nor closed its bank accounts two days before a hearing over the SEC’s request to freeze its funds.
Back in July this year, the SEC filed a lawsuit against Debt Box, alleging the firm schemed to sell unregistered securities known as “node licenses” since 2021.
According to the SEC in the July filing, Debt Box made it known to investors that the licenses would mine crypto that would later grow in price, but they were later made to mint the crypto themselves using computer code.
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Ripple CLO Reacts to the Judge’s Outburst
Reacting to the recent development, Ripple CLO Stuart Alderoty, said in a post on X that it’s becoming a troubling pattern for the U.S. securities regulator.
To prove his points, Alderoty listed three other instances since December 2022, in which the SEC made itself face a similar humiliation in the court.
On the first instance, which involved Ripple, the San Francisco-based cross-border payments firm, he wrote, “Court finds the SEC demonstrated “hypocrisy” by making inconsistent arguments to the Court and not acting out of a “faithful allegiance to the law.”
For the second instance, which involved Coinbase on the 6th of June 2023, Alderoty wrote, “Court agrees that the SEC defaulted on its duty to respond in good faith to Coinbase’s petition for crypto rulemaking.”
For the third instance involving Grayscale, the largest crypto asset manager, on the 29th of August, Ripple CLO wrote, “Court finds that the SEC’s “inconsistent treatment of similar products is arbitrary and capricious.”
Expectedly, this is a welcoming development for the XRP community members, who have been waiting for the SEC to face more humiliation in the remaining court proceedings in its case against Ripple.