Stuart Alderoty, CLO of Ripple, a cryptocurrency and payments services company, railed against the statements of U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler given in a recent congressional hearing. Alderoty criticized the stance taken by Gensler, stating that he “misstates the law” by declaring that tokens, standing alone, are investment contracts.
Ripple CLO Stuart Alderoty Blasts SEC Chair Gary Gensler’s Statements on Tokens Being Securities
Ripple CLO Stuart Alderoty recently complained about the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler’s statements on crypto given in a congressional hearing before the U.S. Senate Appropriations Committee held on July 19.
Alderoty referred to Gensler’s repeated points signaling that cryptocurrency tokens constitute securities, stating:
It’s outrageous that in today’s Senate hearing, Mr. Gensler again misstates the law (and the Howey test), suggesting that tokens, standing alone, are investment contracts. Is the SEC really going to continue to be allowed to peddle these falsehoods?
On July 13, Ripple obtained a landmark ruling determining that programmatic sales — sales executed on exchanges — of the XRP token could not be considered securities. At that time, Alderoty celebrated the verdict declaring that “as a matter of law,” XRP was not a security.
Ripple CEO Brad Garlinghouse has also remarked on the importance of this decision, stating that the ruling directly affected “the SEC’s claims that nearly all tokens are inherently securities” and that the ruling was “likely to set a positive precedent for other digital tokens in the U.S.”
Gensler’s Remarks
In the congressional hearing where the U.S. Senate Appropriations Committee reviewed the SEC’s budget for the fiscal year 2024, Gensler remarked that “generally speaking, there is some group of entrepreneurs behind those projects,” hinting at the possibility of many cryptocurrency tokens being under the jurisdiction of the Securities Act.
Later in the hearing, when asked by Senator Richard Durbin about the best ways of protecting American consumers from cryptocurrency in the future, Gensler answered that the agency had a “robust authority,” detailing that “very few” of these cryptocurrencies were out of their jurisdiction.
Nonetheless, Gensler mentioned bitcoin as one of the assets that does not have the attributes of an investment contract under the securities laws and that it would fall under the jurisdiction of the SEC’s sibling agency, the Commodity Futures Trading Commission (CFTC).
What do you think about the reaction of Ripple’s CLO Stuart Alderoty to the statements of Gary Gensler regarding most tokens having the attributes of securities contracts? Tell us in the comments section below.