Stuart Alderoty, the Chief Legal Officer (CLO) of Ripple, has joined the voices expressing their disappointment with SEC Chair Gary Gensler’s testimony before Congress.
As Ripple continues its legal battle against the United States Securities and Exchange Commission (SEC) regarding the classification of XRP, Alderoty scrutinizes Gensler’s remarks during the hearing, particularly his elusive answers on the topic of securities under US laws.
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In Alderoty’s view, Gensler seemed to “smugly evade question after question,” frustrating several members of Congress. The Ripple CLO, however, highlights a particular moment when Rep. Ritchie Torres, representing New York’s 15th Congressional District, managed to put Gensler on the spot.
A must watch. For hours Mr. Gensler smugly evaded question after question (even laughing about how rich he is) until Rep. Torres took him out with a command of the law and a touch of South Bronx street sense. Gensler didn’t know what hit him until it was too late. https://t.co/RzAK4inkHE
— Stuart Alderoty (@s_alderoty) September 28, 2023
SEC Chair’s Testimony
During the hearing, Rep. Torres expressed concerns about the SEC’s broad interpretation of an “investment contract,” which seemingly encompasses anything the agency deems fit. Torres specifically questioned the SEC Chair on its application of the principle to label almost all cryptocurrencies as securities, a move that Ripple and Coinbase have vehemently contested.
To support his argument, Rep. Torres referred to a recent study by six esteemed law professors, including a Yale University professor, that concluded no Supreme Court decision has ever considered a scheme lacking an actual contract as an “investment contract.”
When he asked Gensler if there were any previous Supreme Court cases where an investment contract was deemed as such without an explicit contract involved, the SEC Chair’s response was evasive. Gensler chose not to provide a direct answer, instead deferring the matter to the SEC’s attorneys who are actively involved in ongoing court cases.
Read Also: Senator Toomey Slams SEC Chair For Classifying Most Crypto as Security
Rep. Torres found Gensler’s evasion “baffling,” considering the investment contract principle serves as the bedrock for the SEC’s legal actions against cryptocurrency-related entities.
It remains to be seen whether other crypto companies involved in legal disputes with the SEC will adopt the congressman’s line of reasoning in future court proceedings.
As the Ripple-SEC battle wages on, scrutiny of the SEC Chair’s testimony highlights the need for clarity and consistency in the classification of digital assets in the United States regulatory landscape.
The unique perspective generated here sheds light on the criticism leveled against SEC Chair Gary Gensler by highlighting his evasive responses and his struggles to defend the SEC’s broadened definition of an “investment contract.”
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