Ripple’s Alderoty Slams SEC Over Misleading “Crypto Asset Security” Term

• Ripple’s legal chief Stuard Alderoty claims the SEC’s use of “crypto-asset security” is misleading and confusing in court proceedings.
• Robinhood’s Daniel Gallagher highlights the absence of the term “crypto asset security” in any Congressional statutes, calling it fabricated.
• The SEC recently apologized for using “crypto asset security” in the Binance case, admitting it confused, but continues to face criticism.

Ripple’s Chief Legal Officer Stuard Alderoty recently took to X (formerly Twitter) to commend Congressman Ritchie Torres (D-NY) for questioning the SEC’s use of the controversial term “crypto asset security” during a congressional hearing. Alderoty argued that the term is misleading and designed to deceive judges, a stance he has repeatedly voiced. According to Alderoty, this term, not recognized by Congress, is now catching up with the SEC’s legal arguments.

Robinhood’s Gallagher Criticizes SEC’s Fabricated Terms

During the hearing, Daniel Gallagher, Robinhood’s Chief Legal Officer, highlighted that no Congressional statute contains the term “crypto asset security.” Gallagher noted that the SEC seemed to have created the term without any legislative backing, further fueling skepticism about the agency’s approach to regulating the crypto industry. 

Alderoty echoed these sentiments, accusing the SEC of using the term to confuse and mislead the judiciary. He argued that the agency’s reliance on this fabricated terminology demonstrates a lack of clear regulatory guidance, which continues to undermine its credibility in ongoing legal battles.

SEC’s Apology for Using “Crypto Asset Security”

The SEC recently admitted its mistake in using the term “crypto asset security” in its case against Binance, acknowledging that it confused. The agency subsequently amended its complaint, retracting the usage of the controversial term. Despite this, the term has reappeared in some of the SEC’s crypto scam alerts, prompting further criticism from industry leaders.

Alderoty noted that the SEC’s inconsistent terminology further emphasizes its lack of alignment with global regulatory standards. He warned that the United States risks falling behind other jurisdictions that have adopted more coherent approaches to crypto regulation.

Ripple CLO Criticizes SEC’s Anti-Crypto Stance

Alderoty has been a vocal critic of the SEC’s anti-crypto approach, stating that the agency is out of sync with other global regulators. He pointed out that the SEC’s actions are not only misleading but also damaging to the broader crypto industry, which is struggling to navigate unclear regulatory waters. The SEC’s reliance on self-invented terms, he argues, highlights the urgent need for clearer regulatory frameworks in the U.S.