Stuart Alderoty, the chief legal officer of the crypto company Ripple, said U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler's recent remarks are false in light of the prosecution Ripple has faced from the SEC. Gensler's remarks came ahead of the 2023 Securities Enforcement Forum on Oct. 25, and he shared a clip of them on X on Nov. 16.
"Fact check Gensler’s recent remarks. Ripple was sued, but never charged with 'dishonesty.' The failed case against it was prejudged, beginning with the ethically compromised Bill Hinman. Gensler has prejudged crypto and has filed suit against others [without] investigation," said Alderoty.
During his speech, Gensler quoted Joseph P. Kennedy, the first SEC Chair, who said, "We are not prosecutors of honest business, nor defenders of crookedness. We are partners of honest business & prosecutors of dishonesty. We shall not prejudge, but we shall investigate," according to Gensler's post on X.
Alderoty said in another post on X that under Gensler, the SEC has lost in court, faced criticism from judges over "shady behavior," and has hidden information about "meetings with a felon." Alderoty compared Gensler to the character Col. Nathan Jessup from the film A Few Good Men.
Ripple faced a three-year legal battle after the SEC accused the company of conducting an unregistered securities offering through the token XRP in 2020, according to Investopedia. In July 2023, the U.S. Southern District Court of New York determined that XRP was a security when sold to institutional investors, but not when sold on an exchange to members of the general public.
In October, Judge Analisa Torres denied the SEC's request for an interlocutory appeal in the decision that Ripple did not violate securities laws by offering the token XRP to members of the public, Federal Newswire previously reported.
Gensler has faced criticism from watchdog groups such as Protect the Public's Trust over his relationship with Sam Bankman-Fried, the founder and former CEO of failed crypto exchange FTX, Federal Newswire previously reported. Michael Chamberlain, director Protect the Public's Trust, told Federal Newswire that the relationship between Bankman-Fried and Gensler is one that Gensler should have "resisted" due to his position in public office. Gensler reportedly met with Bankman-Fried for 45 minutes approximately six months before FTX collapsed.
Bankman-Fried was recently found guilty of seven criminal charges related to his misuse of FTX customer funds, leading to the exchange's collapse and bankruptcy, Federal Newswire previously reported.
Multiple members of Congress have also recently taken aim at Gensler through proposed amendments to House appropriations bills, including Majority Whip Tom Emmer, whose amendment to ban the SEC from using taxpayer-funded resources to engage in enforcement actions against the crypto industry until comprehensive regulations for the industry are legislated recently passed unopposed, and Rep. Tim Burchett, who proposed an amendment that would reduce Gensler's salary to $1, Federal Newswire previously reported.
Alderoty joined Ripple as general counsel in Jan. 2019, according to Ripple's website. Alderoty brought more than 30 years of legal experience to the role, specializing in banking and regulatory affairs.
