Brad Sherman, an American lawmaker, questions why the Securities and Exchange Commission is not taking on crypto exchanges that facilitate Ripple (XRP trades) if it considers it a security.
Sherman brought up this question during the Investor Protector Subcommittee oversight hearing July 19, Sherman said:
“The division has determined that XRP is a security and is going after XRP but, for reasons that I’ll bring up in questions, has not gone after the exchanges where tens of thousands of illegal securities transactions were occurring.”
The subcommittee is investigating the SEC’s enforcement role in the crypto industry, and the division director, Gurbir Grewal, testified before it.
In Sherman’s view, the SEC enforcement division needs to do better to play its role effectively.
“If XRP is a security — and you think it is, and I think it is, why are these crypto exchanges not in violation of law and is it enough that the crypto exchanges have said ‘well, having committed tens of thousands of violations in the past, we promise not to do anymore in the future?’ Is that enough to get you off the hook for enforcement?”
He added that the commission should bring enforcement actions against the major exchanges since they knew XRP was illegal securities “because they stopped doing it even though it was profitable.”
After SEC filed a suit against Ripple and Coinbase, several major crypto exchanges such as Crypto.com, Bitstamp, or Coinbase delisted XRP.
Ripple fights back
Ripple’s general counsel Stuart Alderoty has refuted Sherman’s statement by pointing out that no court in the United States or anywhere else has declared XRP security.
Only the Court can make a ruling (it’s known as due process). This is the pernicious effect of the SEC’s reg by enforcement approach – harming people, markets and American innovation – with unproven allegations masquerading as regulation.
— Stuart Alderoty (@s_alderoty) July 19, 2022
Alderoty says that only a law court can decide whether XRP constitutes security.
Ripple CEO Brad Garlinghouse also expressed his view of the lawmaker’s statement.
Garlinghouse said the US representative’s comments show that he is only trying to advance a political agenda.
Rep @BradSherman Harvard Law magna cum felicite He should know better, but he is trying to push a political agenda instead of sound policy. https://t.co/ypIotiBIBf
— Brad Garlinghouse (@bgarlinghouse) July 19, 2022
Popular crypto lawyer John Deaton also weighed in on the matter, saying the SEC has “stated that it doesn’t make security determinations — ONLY the Federal District Court can.”
Please keep these things in mind @SECGov DOES NOT DETERMINE WHETHER AN ACTIVE IS A SECURITY.
Go back and read the SEC’s opposition to #XRPHolders Petition for Writ Mandamus
The SEC stated that it doesn’t make security determinations – ONLY the Federal District Court can. https://t.co/LL7HZ3K06p
— John E Deaton (207K Followers Beware Imposters) (@JohnEDeaton1) July 19, 2022