Ripple CLO Alderoty Slams SEC’s Approach in Kraken Lawsuit  

• The SEC was recently blocked by a federal judge from labeling crypto assets on Kraken as securities. 
• Stuart Alderoty, Ripple’s Chief Legal Officer, slammed the SEC for using archaic legal tactics in the Kraken trial. 
• The SEC’s enforcement strategy comes under fire from the industry as more specific cryptocurrency rules are demanded. 

A California federal judge has thrown out some of the claims in the SEC’s case against Kraken while honing in on the specific aspects of liability relating to the crypto firm. This partial ruling has been criticized by Ripple’s CLO, Stuart Alderoty, for some of the SEC’s legal maneuvers that he called archaic and unproductive. 

SEC’s Case Against Kraken 

The SEC first launched the lawsuit against Kraken in November last year, claiming that the crypto exchange violated federal securities laws as it was not registered as a broker or an exchange. The commission said that Kraken made business choices that enabled it to generate handsome revenues without having to worry about the rules. Although Kraken had to settle for a $30 million fine and stop the staking services, the legal battle continues. 

Judge Rejects Securities Classification 

The judge also made a significant move to decline the SEC’s claim that crypto assets sold on Kraken are securities. The court noted that the assets themselves are not securities, which is quite important. This decision is a result of the ongoing legal disputes as to how cryptocurrency is to be governed under US securities laws. 

Stuart Alderoty, Ripple’s Chief Legal Officer posted this on his Twitter account stating that although courts have continuously advised the SEC to change its approach the latter remains in its old ways. Alderoty also urged for change within the SEC, saying that such measures might weaken the institution and its aims of regulating innovative technologies. 

The Kraken lawsuit is not the only one. This is not the first time that the SEC has taken similar action against other leading cryptocurrency exchanges such as Coinbase, Binance, and Gemini, for among others, selling unregistered securities. This ongoing regulatory pressure has drawn the ire of industry executives, and SEC Commissioner H. Peirce, who has openly vilified the commission’s approach to the enforcement of its rules. 

Peirce has called on the SEC to offer clearer rules rather than relying on the courts to establish them. She said that the current focus should be changed to nurturing innovation but at the same time considering issues such as investors’ protection. 

The lawsuit against the SEC for the classification of XRP has made Ripple the most vocal company seeking clear laws in the crypto space. This is in agreement with Alderoty who complains of a lack of clear and consistent rules from the SEC as other industry players do.