Stuart Alderoty, Chief Legal Officer (CLO) at Ripple, has once again slammed Gary Gensler for his misuse of power as the chairman of the United States Securities and Exchange Commission (SEC). He said the SEC has been sued for abuse of power more times under Gensler’s leadership than the agency was sued during the reign of three long-serving chairs combined.
This was in reaction to the latest lawsuit filed against the SEC by the Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT).
Read Also: Ripple vs SEC Case Update As of April 5, 2024: Apparent Abuse of Power
Details of the New Lawsuit
The Blockchain Association (BA), a trade group representing the blockchain industry, and the Crypto Freedom Alliance of Texas (CFAT), a Texas-based crypto advocacy group, filed a lawsuit against the Securities and Exchange Commission (SEC) to challenge the agency’s recent expansion of the definition of the term “dealer” under the Securities Exchange Act of 1934.
The BA and CFAT argue that the SEC’s interpretation of the term “dealer” is overly broad and ambiguous. They contend that the expanded definition creates uncertainty for businesses operating in the digital asset space and stifles innovation. Additionally, the lawsuit alleges that the SEC failed to follow proper administrative procedures when implementing the Dealer Rule expansion.
According to the BA’s official statement, the lawsuit seeks to have the court overturn the Dealer Rule expansion. The statement criticizes the rule for being “arbitrarily applied” and “unclear.” The BA argues that the rule harms the development of the digital asset industry and encourages the SEC to regulate through “unwritten rules and guidance” rather than established procedures.
The SEC’s Regulatory Approach
The lawsuit comes amid ongoing tensions between the SEC and the cryptocurrency industry. The SEC has taken a heavily criticized approach to crypto regulation, suing as many crypto companies as they can and arguing that many digital assets qualify as securities and therefore fall under the agency’s purview. The industry has criticized the SEC for a lack of clear regulatory guidance but this has not deterred the regulator.
Stuart Alderoty, Chief Legal Officer (CLO) at Ripple, which is currently engaged in a legal battle with the SEC, commented on the lawsuit. He pointed out that during the first three years of Chair Gary Gensler’s tenure at the SEC, the agency has faced more lawsuits challenging its rulemaking authority than it did in the preceding ten years under the combined leadership of three prior chairs.
In Gensler's first three years as SEC chair, the agency has been sued for abusing its rulemaking powers more times than the SEC was sued in the prior 10+ years (spanning the tenure of three long-serving chairs combined). https://t.co/lbcCyF2a02
— Stuart Alderoty (@s_alderoty) April 23, 2024
Read Also: Ripple CEO Garlinghouse and Chairman Chris Larsen React As the SEC Drops All Charges
The outcome of the lawsuit by the BA and CFAT could have a significant impact on the future of cryptocurrency regulation in the U.S. If the court sides with the industry groups, it could force the SEC to clarify its position on digital assets and potentially limit its ability to regulate the industry through broad interpretations of existing securities laws.
Conversely, a victory for the SEC could solidify its authority over the crypto market and lead to stricter regulations for digital asset businesses. This lawsuit and others like the XRP lawsuit are a clear indication of the growing tension between the SEC and the cryptocurrency industry, and it is sure to be closely watched by stakeholders on both sides.
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